Attached files
file | filename |
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8-K - FORM 8-K - ALLION HEALTHCARE INC | g20838e8vk.htm |
EX-99.2 - EX-99.2 - ALLION HEALTHCARE INC | g20838exv99w2.htm |
EX-99.1 - EX-99.1 - ALLION HEALTHCARE INC | g20838exv99w1.htm |
Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
BRICKELL BAY ACQUISITION CORP.,
BRICKELL BAY MERGER CORP.
and
ALLION HEALTHCARE, INC.
Dated as of October 18, 2009
BRICKELL BAY MERGER CORP.
and
ALLION HEALTHCARE, INC.
Dated as of October 18, 2009
TABLE OF CONTENTS
Page | ||||
RECITALS |
1 | |||
ARTICLE 1 THE MERGER |
1 | |||
1.01 The Merger |
1 | |||
1.02 Closing |
2 | |||
1.03 Effective Time |
2 | |||
1.04 Effects of the Merger |
2 | |||
1.05 Certificate of Incorporation and Bylaws of the Surviving Corporation |
2 | |||
1.06 Directors and Officers |
2 | |||
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY AND MERGER SUB |
3 | |||
2.01 Effect on Shares of Capital Stock |
3 | |||
2.02 Effect on Shares of Merger Sub Capital Stock |
3 | |||
2.03 Effect on Restricted Stock, Options and Warrants |
4 | |||
2.04 Dissenting Shares |
5 | |||
2.05 Exchange of Common Stock |
5 | |||
2.06 Phantom Stock Units |
7 | |||
2.07 Notes |
8 | |||
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
8 | |||
3.01 Organization and Qualification; Subsidiaries |
9 | |||
3.02 Certificate of Incorporation and Bylaws |
9 | |||
3.03 Capitalization |
9 | |||
3.04 Authority Relative to the Transactions |
10 | |||
3.05 No Conflict; Required Filings and Consents |
11 | |||
3.06 Compliance with Laws; Permits |
12 | |||
3.07 SEC Filings; Financial Statements; Undisclosed Liabilities, Internal Controls |
14 | |||
3.08 Absence of Certain Changes or Events |
16 | |||
3.09 Litigation |
16 | |||
3.10 Labor and Employment Matters |
16 | |||
3.11 Employee Benefit Plans |
16 | |||
3.12 Real Property; Assets |
18 | |||
3.13 Intellectual Property |
19 | |||
3.14 Taxes |
20 | |||
3.15 Environmental Matters |
21 | |||
3.16 Material Contracts |
22 | |||
3.17 Insurance |
24 | |||
3.18 Affiliated Transactions |
24 | |||
3.19 Information in Proxy Statement |
24 |
Page | ||||
3.20 Required Stockholder Vote |
25 | |||
3.21 Opinion of Financial Advisor |
25 | |||
3.22 Brokers |
25 | |||
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
26 | |||
4.01 Organization and Qualification |
26 | |||
4.02 Charter Documents and Bylaws |
26 | |||
4.03 Authority Relative to this Agreement |
27 | |||
4.04 No Violation; Required Filings and Consents |
27 | |||
4.05 Brokers |
28 | |||
4.06 Litigation |
28 | |||
4.07 Information to be Supplied |
28 | |||
4.08 Stock Ownership |
28 | |||
4.09 Financing |
28 | |||
4.10 Solvency |
29 | |||
ARTICLE 5 COVENANTS |
29 | |||
5.01 Interim Operations |
29 | |||
5.02 Stockholders Meeting |
32 | |||
5.03 Filings and Consents |
34 | |||
5.04 Access to Information |
35 | |||
5.05 Notification of Certain Matters |
36 | |||
5.06 Public Announcements |
36 | |||
5.07 Indemnification; Directors and Officers Insurance |
36 | |||
5.08 Further Assurances; Commercially Reasonable Efforts |
37 | |||
5.09 No Solicitation |
37 | |||
5.10 Third Party Standstill Agreements |
40 | |||
5.11 SEC Reports |
40 | |||
5.12 Termination of Registration |
40 | |||
5.13 Stockholder Litigation |
40 | |||
5.14 Special Meeting |
41 | |||
5.15 Employee Benefit Matters |
41 | |||
5.16 Transfer Taxes |
42 | |||
5.17 Financing Assistance |
42 | |||
5.18 Maintenance of Commitments |
43 | |||
5.19 Takeover Statutes |
43 | |||
5.20 Section 16 Matters |
44 | |||
ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER |
44 | |||
6.01 Conditions to the Obligations of Each Party |
44 | |||
6.02 Conditions to Obligations of Merger Sub and Parent |
44 | |||
6.03 Conditions to Obligations of the Company |
45 | |||
ARTICLE 7 TERMINATION |
46 | |||
7.01 Termination by Mutual Consent |
46 | |||
7.02 Termination by Merger Sub, Parent or the Company |
46 |
3
Page | ||||
7.03 Termination by Merger Sub and Parent |
47 | |||
7.04 Termination by the Company |
48 | |||
7.05 Effect of Termination |
48 | |||
ARTICLE 8 MISCELLANEOUS |
49 | |||
8.01 Payment of Fees and Expenses |
49 | |||
8.02 Guarantee |
53 | |||
8.03 No Survival |
53 | |||
8.04 Non-Reliance |
53 | |||
8.05 Modification or Amendment |
53 | |||
8.06 Entire Agreement; Assignment |
53 | |||
8.07 Severability |
54 | |||
8.08 Notices |
54 | |||
8.09 Governing Law |
55 | |||
8.10 Descriptive Headings |
55 | |||
8.11 Counterparts |
55 | |||
8.12 Certain Definitions |
55 | |||
8.13 Specific Performance |
58 | |||
8.14 Extension; Waiver |
58 | |||
8.15 Third-Party Beneficiaries |
58 | |||
8.17 Submission to Jurisdiction |
59 | |||
DEFINED TERMS |
||||
Acquisition Proposal |
39 | |||
Action |
12 | |||
affiliate |
55 | |||
Agent |
5 | |||
Agreement |
1 | |||
Authorized Committee |
56 | |||
Benefit Plans |
17 | |||
Break-Up Fee |
50 | |||
Cash-Pay Option |
4 | |||
Certificate of Merger |
2 | |||
Certificates |
6 | |||
Closing |
2 | |||
Closing Date |
2 | |||
Code |
7 | |||
Commitment Letters |
28 | |||
Common Stock |
3 | |||
Company |
1 | |||
Company Board |
1 | |||
Company Disclosure Documents |
24 | |||
Company Representatives |
35 | |||
Company Terminating Breach |
47 | |||
Confidentiality Agreement |
35 |
4
Continuing Employee |
41 | |||
Debt Commitment Letters |
28 | |||
Debt Financing |
42 | |||
DGCL |
1 | |||
Disinterested Director |
56 | |||
Dissenting Shares |
5 | |||
Dissenting Stockholder |
5 | |||
Effective Time |
2 | |||
Employees |
17 | |||
Environmental Laws |
21 | |||
Equity Commitment Letter |
28 | |||
ERISA |
16 | |||
ERISA Affiliate |
17 | |||
Exchange Act |
12 | |||
Expenses |
49 | |||
Expiration Date |
46 | |||
Financial Advisor |
25 | |||
GAAP |
14 | |||
Governmental Authority |
11 | |||
Governmental Programs |
13 | |||
Gross Up Payment |
56 | |||
Guarantor |
56 | |||
HSR Act |
12 | |||
Indemnified Parties |
36 | |||
Intervening Event |
56 | |||
Investor |
28 | |||
IP Rights |
19 | |||
Knowledge |
56 | |||
Law |
56 | |||
Laws |
56 | |||
Lenders |
28 | |||
Liens |
10 | |||
Limited Guarantee |
56 | |||
Material Adverse Effect |
56 | |||
Material Contract |
22 | |||
Merger |
1 | |||
Merger Consideration |
3 | |||
Merger Sub |
1 | |||
Merger Sub Common Stock |
3 | |||
Non-Breach Financing Failure |
50 | |||
Note |
8 | |||
Note Consideration |
8 | |||
Notice Period |
39 | |||
Option |
4 | |||
Option Consideration |
4 | |||
Order |
57 |
v
Owned Assets |
18 | |||
Parent |
1 | |||
Parent Break-Up Fee |
50 | |||
Parent Default Fee |
50 | |||
Parent Group |
57 | |||
Parent Representatives |
35 | |||
Parent Terminating Breach |
48 | |||
Permit |
12 | |||
Permitted Liens |
18 | |||
Person |
57 | |||
Phantom Stock Unit |
7 | |||
Phantom Stock Unit Consideration |
7 | |||
Preferred Stock |
9 | |||
Private Programs |
13 | |||
Proxy Statement |
24 | |||
Restricted Stock Award |
57 | |||
SEC |
14 | |||
SEC Reports |
14 | |||
Securities Act |
12 | |||
Special Committee |
58 | |||
Stock Plans |
4 | |||
Stockholder Approval |
25 | |||
Stockholders Meeting |
32 | |||
subsidiaries |
58 | |||
Subsidiaries |
9 | |||
subsidiary |
58 | |||
Subsidiary |
9 | |||
Superior Proposal |
40 | |||
Surviving Corporation |
2 | |||
Surviving Corporation Common Stock |
3 | |||
Tax |
20 | |||
Tax Return |
20 | |||
Tax Returns |
20 | |||
Taxes |
20 | |||
Transactions |
10 | |||
Transfer Taxes |
42 | |||
Warrant Consideration |
5 | |||
Warrants |
4 |
vi
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this Agreement), is made and entered into as of
October 18, 2009, by and among Brickell Bay Acquisition Corp., a Delaware corporation
(Parent), Brickell Bay Merger Corp., a Delaware corporation (Merger Sub), and
Allion Healthcare, Inc., a Delaware corporation (the Company).
RECITALS
WHEREAS, the boards of directors of Parent, Merger Sub and the Company have unanimously
approved the merger of Merger Sub with and into the Company (the Merger), upon the terms
and subject to the conditions set forth in this Agreement, and have determined that the Merger and
the other transactions contemplated by this Agreement are fair to, and in the best interests of,
their respective stockholders;
WHEREAS, the Board of Directors of the Company (the Company Board) has unanimously
resolved to recommend that the stockholders of the Company approve the Merger;
WHEREAS, the transactions described in this Agreement are subject to the approval of the
stockholders of the Company and the satisfaction of certain other conditions set forth in this
Agreement;
WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement
to Parents and Merger Subs willingness to enter into this Agreement, Parent and certain
beneficial owners (the Rollover Holders) of Common Stock are entering into Exchange
Agreements (the Exchange Agreements), pursuant to which the Rollover Holders are
agreeing, among other things, to contribute the portion of their Common Stock set forth therein
(such shares, collectively, the Rollover Shares) to Parent immediately prior to the
Effective Time of the Merger; and
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition
and inducement to Parents and Merger Subs willingness to enter into this Agreement, certain
stockholders of the Company are entering into a Voting Agreement substantially in the form attached
as Exhibit A (the Voting Agreement).
NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth herein, Parent, Merger Sub and the Company agree as
follows:
ARTICLE 1
THE MERGER
1.01 The Merger. At the Effective Time (as defined in Section 1.03), subject
to the terms and conditions of this Agreement and in accordance with the provisions of the Delaware
General Corporation Law (the DGCL), (i)
Merger Sub shall be merged with and into the Company, (ii) the separate corporate existence of
Merger Sub shall cease, and (iii) the Company shall continue as the surviving corporation and a
wholly owned subsidiary of Parent. The
Company, as the surviving corporation after the Merger, is
hereinafter sometimes referred to as the Surviving Corporation.
1.02 Closing. Subject to the conditions contained in this Agreement, the closing of
the Merger (the Closing) shall take place (i) at the offices of Alston & Bird LLP, 90
Park Avenue, New York, New York 10016, at 10:00 a.m., local time, on the date most promptly
practicable following the satisfaction or waiver of the conditions set forth in Article 6
(which can be satisfied prior to Closing), but in no event later than the third (3rd)
business day following such date or (ii) at such other place and time and/or on such other date as
the Company and Merger Sub may mutually agree in writing. The date on which the Closing occurs is
hereinafter referred to as the Closing Date.
1.03 Effective Time. At the Closing, the parties shall cause the Merger to be
consummated by filing with the Secretary of State of the State of Delaware a certificate of merger
(the Certificate of Merger), executed in accordance with the relevant provisions of the
DGCL. The Merger shall become effective upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware or at such later time as is agreed to by the parties
hereto and specified in the Certificate of Merger (the time at which the Merger becomes effective
is hereinafter referred to as the Effective Time).
1.04 Effects of the Merger. The Merger shall have the effects set forth in this
Agreement, the Certificate of Merger and the DGCL. Without limiting the generality of the
foregoing, at the Effective Time, all the properties, rights, privileges, powers and franchises of
the Company and the Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and the Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.05 Certificate of Incorporation and Bylaws of the Surviving Corporation.
(a) At the Effective Time, the certificate of incorporation of the Company shall be amended to
read in its entirety as the certificate of incorporation of Merger Sub as in effect immediately
prior to the Effective Time, and as so amended shall be the Certificate of Incorporation of the
Surviving Corporation, until duly amended in accordance with applicable Law and the Surviving
Corporations certificate of incorporation and bylaws; provided that the name of the Surviving
Corporation shall be Allion Healthcare, Inc.
(b) The bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be
the bylaws of the Surviving Corporation, until duly amended in accordance with applicable Law and
the Surviving Corporations certificate of incorporation and bylaws.
1.06 Directors and Officers. The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of
the Surviving Corporation and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal in accordance with applicable
Law and the Surviving Corporations certificate of incorporation and bylaws. The officers of the
Company immediately prior to the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office until their
2
respective successors are duly elected and qualified,
or their earlier death, resignation or removal.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE COMPANY AND MERGER SUB
OF THE COMPANY AND MERGER SUB
2.01 Effect on Shares of Company Capital Stock.
(a) Common Stock of the Company. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of Common Stock, the Company or
Merger Sub, each share of common stock of the Company, par value $0.001 per share (the Common
Stock) issued and outstanding immediately prior to the Effective Time (other than (i)
Dissenting Shares (as defined in Section 2.04), and (ii) those shares of Common Stock to be
canceled pursuant to Section 2.01(c)) shall be converted into the right to receive Six
Dollars and Sixty Cents ($6.60) in cash (the Merger Consideration), payable to the holder
of such shares of Common Stock, without interest or dividends, less applicable withholding Taxes,
in the manner provided in Section 2.05. All such shares of Common Stock, when so
converted, shall no longer be outstanding and shall automatically be canceled, and each holder of a
certificate or certificates representing shares of Common Stock shall cease to have any rights with
respect to such shares of Common Stock, except the right to receive the Merger Consideration.
(b) Rollover Shares. Immediately prior to the Effective Time, the Rollover Holders
shall contribute the Rollover Shares to Parent pursuant to the Exchange Agreements. Subsequent to
the receipt of the Rollover Shares from the Rollover Holders, such Rollover Shares shall
automatically be canceled, by virtue of the Merger, in accordance with Section 2.01(c)
below.
(c) Cancellation of Certain Shares of Common Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any shares of Common
Stock, the Company or Merger Sub, each share of Common Stock owned by the Company or any of its
wholly owned Subsidiaries as treasury stock or otherwise or owned by Merger Sub or Parent
(including, without limitation, the Rollover Shares) or any of their direct or indirect
subsidiaries immediately prior to the Effective Time shall automatically be canceled, and no cash
or other consideration shall be delivered or deliverable in exchange for such shares of Common
Stock.
2.02 Effect on Shares of Merger Sub Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of Merger Sub Common Stock,
the Company or Merger Sub, each share of common stock, par value $0.01 per share, of Merger Sub
(Merger Sub Common Stock) issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid and non-assessable share of common stock,
par value $0.01 per share, of the Surviving Corporation (Surviving Corporation Common
Stock). Each certificate that, immediately prior to the Effective Time, represented
3
issued and outstanding shares of Merger Sub Common Stock shall be deemed to represent the same number of
shares of Surviving Corporation Common Stock.
2.03 Effect on Restricted Stock, Options and Warrants.
(a) Restricted Stock. Between the date of this Agreement and the Effective Time, the
Company shall take all necessary action to provide that each outstanding Restricted Stock Award,
the restrictions of which have not lapsed immediately prior to the Effective Time, shall become
fully vested immediately prior to the Effective Time and the holder of the resultant shares of
Common Stock thereof shall be entitled to receive the Merger Consideration pursuant to Section
2.01(a) for such shares.
(b) Options. Between the date of this Agreement and the Effective Time, the Company
shall take all necessary action to provide that each Option shall become fully vested and
exercisable immediately prior to the Effective Time. Holders of the Options shall be given the
opportunity to exercise their Options, effective immediately prior to the Effective Time and
conditioned upon the consummation of the Merger, and thereby to receive the Merger Consideration
for each share of Common Stock subject to such exercised Options pursuant to Section 2.01.
As of the Effective Time, by virtue of the Merger and without any action on the part of the
Company, Merger Sub or the holder of any Option, each Option outstanding immediately prior to the
Effective Time that is not exercised pursuant to the preceding sentence and that has a per-share
exercise price less than the Merger Consideration (each, a Cash-Pay Option), shall be
converted into the right to receive an amount in cash equal to the product of (i) the total number
of shares of Common Stock subject to such Cash-Pay Option multiplied by (ii) the excess of the
Merger Consideration over the per-share exercise price of such Cash-Pay Option, with the aggregate
amount of such payment rounded to the nearest cent (the Option Consideration), payable to
the holder of such Cash-Pay Option, without dividends or interest, less applicable withholding
Taxes, in the manner provided in this Section 2.03(b). All such Cash-Pay Options, when so
converted, shall cease to be outstanding and shall automatically be canceled, and each holder of a
Certificate representing a Cash-Pay Option shall cease to have any rights with respect to such
Cash-Pay Options, except the right to receive the Option Consideration. Parent shall, or shall
cause the Company to, pay to holders of Cash-Pay Options the Option Consideration as soon as
reasonably practicable following the Effective Time. Each Option outstanding immediately prior to
the Effective Time that has a per-share exercise price equal to or greater than the Merger
Consideration shall be canceled, and each holder of a Certificate representing such canceled Option
shall cease to have any rights with respect to such Option and shall not be entitled to
receive any payment with respect thereto. For purposes of this Agreement, the term
Option means each outstanding unexercised option to purchase shares of Common Stock,
whether or not then vested or fully exercisable, granted to any current or former employee,
director, consultant or advisor of the Company or any Subsidiary or any other person, whether under
any stock option plan or otherwise (including, without limitation, under the Companys 1998 Stock
Option Plan and Amended and Restated 2002 Stock Incentive Plan (collectively, the Stock
Plans)).
(c) Warrants. As of the Effective Time, by virtue of the Merger and without any
action on the part of the Company, Merger Sub or the holder of any warrants to purchase shares of
Common Stock (Warrants), each Warrant outstanding immediately prior to the Effective
4
Time, whether or not then vested or exercisable in accordance with its terms, shall be converted
into the right to receive an amount in cash equal to the product of (i) the total number of shares
of Common Stock subject to such Warrant multiplied by (ii) the excess, if any, of the Merger
Consideration over the exercise price of such Warrant, with the aggregate amount of such payment
rounded to the nearest cent (the Warrant Consideration), payable to the holder of such
Warrant, without dividends or interest, less applicable withholding Taxes, in the manner provided
in this Section 2.03(c). All such Warrants, when so converted, shall no longer be
outstanding and shall automatically be canceled, and each holder of a certificate or certificates
representing Warrants shall cease to have any rights with respect to such Warrants, except the
right to receive the Warrant Consideration. Parent shall, or shall cause the Company to, pay to
holders of Warrants the Warrant Consideration as soon as reasonably practicable following the
Effective Time.
(d) Effectuation. The Board of Directors of the Company (or the appropriate committee
thereof) shall take or cause to be taken all actions necessary to effectuate this Section
2.03 to the extent that such treatment is not expressly provided for by the terms of the
applicable Stock Plans and related award agreements. The Company shall take such actions as are
necessary or appropriate so that, as of the Effective Time, the Stock Plans shall be terminated.
2.04 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary,
any shares of Common Stock issued and outstanding immediately prior to the Effective Time and held
by a stockholder (a Dissenting Stockholder) who has not voted in favor of the Merger or
consented thereto in writing and who has properly demanded appraisal for such shares of Common
Stock (Dissenting Shares) in accordance with the DGCL, shall not be converted into the
right to receive the Merger Consideration at the Effective Time in accordance with Section
2.01(a) hereof, but shall represent and become the right to receive such consideration as may
be determined to be due to such Dissenting Stockholder pursuant to the Laws of the State of
Delaware, unless and until such holder fails to perfect or withdraws or otherwise loses such
holders right to appraisal and payment under the DGCL. If, after the Effective Time, such holder
fails to perfect or withdraws or otherwise loses such holders right to appraisal, the Dissenting
Shares held by such holder shall be treated as if they had been converted as of the Effective Time
into a right to receive the Merger Consideration, without any interest or dividends thereon, in
accordance with Section 2.01(a). The Company shall give Parent prompt notice of any
demands received by the Company for appraisal of Common Stock, withdrawals of such demands, and any
other instruments served pursuant to the DGCL and
received by the Company. The Company shall have the right to participate in all negotiations
and proceedings with respect to such demands, and the Company shall not, without the prior written
consent of Parent, make any payment with respect to any demands for appraisal or offer to settle or
settle any such demands.
2.05 Exchange of Common Stock.
(a) Agent. Prior to the Effective Time, Merger Sub shall appoint a commercial bank or
trust company reasonably acceptable to the Company to act as exchange and paying agent, registrar
and transfer agent (the Agent) for the purpose of exchanging (other than the Rollover
Shares) (i) certificates representing, immediately prior to the Effective Time, Common Stock for
the aggregate Merger Consideration, or (ii) shares of uncertificated Common Stock
5
outstanding
immediately prior to the Effective Time (Uncertificated Shares) for the aggregate Merger
Consideration.
(b) Deposit of Consideration. At or prior to the Effective Time, Merger Sub shall
supply or cause to be supplied for the account of the Agent, in trust for the benefit of the
holders of the Common Stock and for exchange pursuant to this Section 2.05, the aggregate
consideration payable to holders of the Common Stock pursuant to Section 2.01.
(c) Notice of Merger. Promptly, but in no event later than five (5) business days,
after the Effective Time, the Surviving Corporation shall cause the Agent to mail to each holder of
record of certificates or other instruments that immediately prior to the Effective Time
represented shares of Common Stock (the Certificates) or Uncertificated Shares (i) a
notice of the effectiveness of the Merger, (ii) a form letter of transmittal, in a form reasonably
acceptable to Parent and the Company, which shall specify that delivery shall be effected, and risk
of loss and title shall pass, only upon proper delivery of the Certificates or transfer of
Uncertificated Shares to the Agent, and (iii) instructions for use in surrendering the Certificates
or transferring Uncertificated Shares and receiving the Merger Consideration in respect thereof.
(d) Exchange Procedures. Upon surrender to the Agent of a Certificate or transfer of
Uncertificated Shares, together with such letter of transmittal duly executed and completed in
accordance with the instructions thereto and such other documents as may be required pursuant to
such instructions, the holder of such Certificate or Uncertificated Shares (other than Dissenting
Shares and Common Stock to be canceled pursuant to Section 2.01(c)) shall be entitled to
receive, in exchange therefor, within ten (10) business days after such surrender or transfer, cash
in an amount equal to the product of (i) the number of shares of Common Stock formerly represented
by such Certificate or Uncertificated Shares and (ii) the Merger Consideration, which shall be paid
by Agent by check or wire transfer in accordance with the instructions provided by such holder. No
interest or dividends will be paid or accrued on the consideration payable upon the surrender of
any Certificate or transfer of any Uncertificated Shares. If the consideration provided for herein
is to be made to a person other than the person in whose name the surrendered Certificate or
transferred Uncertificated Shares is registered, the surrendered Certificate or transferred
Uncertificated Shares shall be properly endorsed, accompanied by appropriate stock powers or
otherwise in proper form for transfer, and the
person requesting such payment shall pay any transfer or other taxes required by reason of
such payment to a person other than the registered holder of the Certificate or the Uncertificated
Shares, or that such person shall establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable.
(e) Lost Certificates. In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit (in form and substance acceptable to the Surviving
Corporation) of that fact by the person (who shall be the record owner of such Certificate)
claiming such Certificate to be lost, stolen or destroyed, the Agent will issue, in exchange for
such affidavit, the Merger Consideration deliverable in respect of such Certificate pursuant to
this Agreement.
(f) Termination of Fund. At any time following the one (1) year anniversary of the
Effective Time, the Surviving Corporation shall be entitled to require the Agent to deliver to
6
it
any funds that had been made available to the Agent and not disbursed to holders of Common Stock
(including, without limitation, all interest and other income received by the Agent in respect of
all funds made available to it), and, thereafter, such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat and other similar Laws) only as
general creditors thereof with respect to any consideration payable upon due surrender of the
Certificates or transfer of the Uncertificated Shares held by them. Notwithstanding the foregoing,
none of Parent, the Surviving Corporation or the Agent shall be liable to any holder of Common
Stock, Options or Warrants, for any consideration delivered in respect of such Common Stock,
Options or Warrants to a public official pursuant to any abandoned property, escheat or other
similar Law.
(g) Withholding Rights. Each of the Agent, the Surviving Corporation and Parent shall
be entitled to deduct and withhold from the consideration otherwise payable to any holder of Common
Stock, Options or Warrants pursuant to this Agreement such amounts as may be required to be
deducted or withheld with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the Code), or any applicable provision of state, local or foreign tax
Law. To the extent that amounts are so deducted or withheld and paid over to the appropriate
taxing authority by Agent, the Surviving Corporation or Parent, such amounts shall be treated for
all purposes of this Agreement as having been paid to the person to whom such amounts would
otherwise have been paid.
(h) Transfer Books. At the close of business on the day on which the Effective Time
occurs, the stock transfer books of the Company shall be closed and thereafter there shall be no
further registration of transfers of shares of Common Stock on the records of the Company.
(i) Adjustments. Notwithstanding anything in this Agreement to the contrary, the
Merger Consideration, Option Consideration and Warrant Consideration shall each be adjusted to
reflect fully the effect of any stock split, reverse stock split, stock dividend, reclassification,
redenomination, recapitalization, split-up, combination, exchange of shares or other similar
transaction with respect to the Common Stock occurring or having a record date or effective date
between the date of this Agreement and the Effective Time.
2.06 Phantom Stock Units.
(a) At the Closing, Merger Sub shall pay or cause to be paid to each holder of a cash-settled
phantom stock unit granted by the Company and outstanding immediately prior to the Closing (each, a
Phantom Stock Unit), whether or not then vested in accordance with its terms, an amount
in cash equal to the product of (i) the number of Phantom Stock Units held by such holder and (ii)
the Merger Consideration (the Phantom Stock Unit Consideration), by wire transfer of
immediately available funds to the account specified in writing by such holder at least three (3)
business days prior to Closing. No interest will be paid or accrued on the Phantom Stock Unit
Consideration.
(b) Merger Sub shall be entitled to deduct and withhold, or cause to be deducted and withheld,
from the consideration otherwise payable to any holder of Phantom Stock Units pursuant to this
Agreement such amounts as may be required to be deducted or withheld with
7
respect to the making of
such payment under the Code, or any applicable provision of state, local or foreign tax Law. To
the extent that amounts are so deducted or withheld and paid over, or caused to be paid over, to
the appropriate taxing authority by Merger Sub, such amounts shall be treated for all purposes of
this Agreement as having been paid to such holder of Phantom Stock Units.
(c) At the Closing, Merger Sub shall also pay or cause to be paid to each holder of a Phantom
Stock Unit, an amount in cash equal to the Gross Up Payment, by wire transfer of immediately
available funds to the account specified in writing by such holder at least three (3) business days
prior to Closing. No interest will be paid or accrued on the Gross Up Payment payable on such
Phantom Stock Units.
(d) When the Phantom Stock Unit Consideration and the Gross Up Payment have been paid, each
holder of a certificate or certificates representing Phantom Stock Units shall cease to have any
rights with respect to such Phantom Stock Units, except for the provisions of such certificates as
shall, by their terms, survive payment of the Phantom Stock Units, including provisions with
respect to any additional payment subject to the excise tax imposed by Section 4999 of the Code.
(e) Notwithstanding anything in this Agreement to the contrary, the Phantom Stock Unit
Consideration shall be adjusted to reflect fully the effect of any stock split, reverse stock
split, stock dividend, reclassification, redenomination, recapitalization, split-up, combination,
exchange of shares or other similar transaction with respect to the Common Stock occurring or
having a record date or effective date between the date of this Agreement and the Closing.
2.07 Notes. At the Closing, Merger Sub shall pay or cause to be paid to each holder
of a promissory note outstanding immediately prior to the Closing that is listed on Section
2.07 of the Company Disclosure Schedule (each, a Note), whether or not then due and
payable in accordance with its terms, an amount in cash equal to the principal plus accrued
interest on such Note (the Note Consideration), by wire transfer of immediately available
funds to the account specified in
writing by such Note holder at least three (3) business days prior to Closing. All such
Notes, when so paid, shall no longer be outstanding and shall automatically be canceled, and each
holder of a Note shall cease to have any rights with respect to such Note.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Form 10-K filed with the SEC for the fiscal year ended December 31,
2008 (the Latest 10-K) and SEC Reports (as defined in Section 3.07(a)) filed with
the SEC after the filing of the Latest 10-K but prior to the date hereof (in each case, excluding
any risk factors or cautionary, predictive or forward looking statements contained therein) or as
set forth in the Company Disclosure Schedule (it being understood that any matter disclosed in such
Latest 10-K, such SEC Reports filed after the filing of the Latest 10-K or in any section of the
Company Disclosure Schedule shall be deemed disclosed in each representation and warranty where the
relevance of such disclosure is reasonably apparent on its
8
face, without regard to whether a
representation or warranty specifically references either the Company Disclosure Schedules, the
Latest 10-K or the SEC Reports filed after the filing of the Latest 10-K), the Company represents
and warrants to Parent and Merger Sub as follows:
3.01 Organization and Qualification; Subsidiaries.
(a) The Company and each subsidiary of the Company (each, a Subsidiary and
collectively, the Subsidiaries) is a corporation or limited liability company duly
formed, validly existing and in good standing (to the extent applicable) under the Laws of the
jurisdiction of its formation. The Company and each Subsidiary has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its business as it is now
being conducted, except as would not reasonably be expected to have a Material Adverse Effect. The
Company and each Subsidiary is duly qualified as a foreign corporation or limited liability company
to do business, and is in good standing (to the extent applicable), in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except where the failure to be so qualified and in good
standing would not reasonably be expected to have a Material Adverse Effect.
(b) Section 3.01(b) of the Company Disclosure Schedule sets forth a true and complete
list of each Subsidiary, together with the jurisdiction of formation of each Subsidiary and the
percentage of the outstanding equity interests of each Subsidiary owned by the Company and each
other Person.
(c) Except for the Subsidiaries, the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or exercisable for any equity
or similar interest in, any corporation, limited liability company, partnership, joint venture or
other business association or entity.
3.02 Certificate of Incorporation and Bylaws. The Company has furnished to Parent and
Merger Sub a complete and correct copy of the certificate of incorporation and the bylaws (or
equivalent organizational documents) of the Company and each Subsidiary in full force and effect as
of the date of this Agreement. Neither the Company nor any Subsidiary is in material violation of
any provision of its certificate of incorporation or bylaws (or equivalent organizational
documents).
3.03 Capitalization.
(a) The authorized capital stock of the Company consists of (i) 80,000,000 shares of Common
Stock and (ii) 20,000,000 shares of preferred stock, par value $0.001 per share (the Preferred
Stock). As of October 14, 2009, (i) 28,699,094 shares of Common Stock were issued and
outstanding, all of which have been duly authorized and are validly issued, fully paid and
nonassessable, (ii) no shares of Preferred Stock are issued and outstanding, (iii) no shares of
Common Stock or Preferred Stock were held in the treasury of the Company, and (iv) 822,568 shares
of Common Stock were reserved for issuance pursuant to the Stock Plans. All shares of Common Stock
issuable upon exercise of Options have been duly reserved for issuance by the Company, and upon any
issuance of such shares in accordance with the terms of the Stock Plans, will be duly authorized,
validly issued and fully paid and nonassessable.
9
(b) Section 3.03(b) of the Company Disclosure Schedule sets forth the name of each
holder of an outstanding Option or Warrant, together with the number of shares of Common Stock
issuable thereunder, the grant date, exercise price, expiration date and the vesting schedule.
Section 3.03(b) of the Company Disclosure Schedule sets forth each right issued by the
Company, the value of which is based on capital stock or another similar interest in the Company
(e.g., phantom units), together with the number of shares of Common Stock on which such value is
based, the grant date, and vesting schedule. Except as set forth on Section 3.03(b) of the
Company Disclosure Schedule, there are no options, warrants, convertible securities, calls,
preemptive rights, rights of first refusal or other rights, or agreements or commitments of any
nature obligating the Company to issue, transfer or sell any shares of capital stock of, or other
equity interests in, the Company.
(c) There are no outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any capital stock of, or other equity interests in, the
Company or any Subsidiary. Except as set forth on Section 3.03(c) of the Company
Disclosure Schedule, to the Companys Knowledge, there are no stockholders agreements, voting
trusts or other agreements or understandings relating to voting of any shares of Common Stock or
granting to any Person the right to elect, or to designate or nominate for election, a director to
the Company Board.
(d) Each outstanding share of capital stock of, or other equity interests in, each Subsidiary
is duly authorized, validly issued, fully paid and nonassessable, and, except as set forth in
Section 3.03(d) of the Company Disclosure Schedule, each such share or other equity
interest that is owned directly or indirectly by the Company is owned by the Company or another
Subsidiary free and clear of all security interests, liens, claims, pledges, options, rights of
first refusal, rights of first offer, charges and other encumbrances of any nature whatsoever
(collectively, Liens). There are no stockholders agreements, voting trusts or other
agreements or understandings relating to voting of any equity securities of any Subsidiary or
granting to any Person (other than the Company or a wholly-owned Subsidiary) the right to elect, or
to designate or nominate for election, a director to the board of directors (or equivalent body) of
any Subsidiary.
3.04 Authority Relative to the Transactions.
(a) The Company has the corporate power and authority necessary to execute and deliver this
Agreement, to perform its obligations hereunder and, subject to the adoption of this Agreement and
the approval of the Merger by the holders of a majority of the outstanding shares of Common Stock
entitled to vote thereon, to consummate the transactions contemplated hereby (the
Transactions). The execution and delivery by the Company of this Agreement and the
consummation by the Company of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of the Company are
necessary to authorize the Companys execution and delivery of this Agreement or to consummate the
Transactions (other than the approval and adoption of this Agreement and the Merger by the holders
of a majority of the outstanding shares of Common Stock entitled to vote thereon and the filing of
appropriate merger documents as required by the DGCL). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization, execution and delivery
by Parent and Merger Sub, constitutes the legal, valid
10
and binding obligation of the Company,
enforceable against the Company in accordance with its terms (except to the extent its
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors rights generally and by general equitable
principles).
(b) On or prior to the date of this Agreement, the Company Board has, at a meeting duly called
and held in which all directors were present, unanimously determined that this Agreement and the
Transactions are fair to and in the best interest of the Company and its stockholders, and adopted
resolutions by a unanimous vote (i) approving this Agreement, (ii) declaring this Agreement and the
Merger advisable, (iii) directing that this Agreement be submitted to the Companys stockholders
for their adoption, and (iv) recommending to the stockholders that they approve and adopt this
Agreement and the Merger (the Board Recommendation), which resolutions, subject to
Sections 5.02(c) and 5.09(b), have not been subsequently withdrawn or modified in a
manner adverse to Parent.
(c) The Special Committee has (i) unanimously determined that this Agreement and the
Transactions are fair to and in the best interest of the Company and its stockholders, and (ii)
unanimously recommended that the Company Board approve this Agreement and the Transactions, which
determination and recommendation, subject to Sections 5.02(c) and 5.09(b), have not been
subsequently withdrawn or modified in a manner adverse to Parent.
3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery by the Company of this Agreement do not, and the performance by
the Company of this Agreement and the consummation of the Transactions will not, (i) conflict with
or violate the certificate of incorporation or bylaws (or equivalent organizational documents) of
the Company, (ii) assuming that all consents, approvals, authorizations and other actions described
in Section 3.05(b) have been obtained or taken and all filings and obligations described in
Section 3.05(b) have been made or fulfilled, conflict with or violate any Law applicable to
the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is
bound or affected, (iii) except as set forth in Section 3.05(a) of the Company Disclosure
Schedule, conflict with, result in a breach of or constitute (with or without notice or lapse of
time or both) a default under, or give rise to any right of termination, acceleration or
cancellation of, or result in the creation or imposition of a Lien on any property or asset of the
Company pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation, except, with respect to clauses (ii) and (iii)
of this Section 3.05(a), to the extent any such conflicts, violations, breaches, defaults
or other occurrences would not, individually or in the aggregate, have a Material Adverse Effect.
(b) Except as set forth in Section 3.05(b) of the Company Disclosure Schedule, the
execution and delivery by the Company of this Agreement do not, and the performance by the Company
of this Agreement and the consummation by the Company of the Transactions will not, (i) result in
any termination, revocation, material modification, rescission or other material adverse impact on
any material written consent, approval, license, permit, exemption, or registration of any domestic
(federal, state or local) or foreign government or governmental, regulatory or administrative
authority, agency, instrumentality or commission, or any court, tribunal, or judicial or arbitral
body (each, a Governmental Authority); or (ii) require any
11
material consent, approval,
authorization or permit of, or material filing with or notification to, any Governmental Authority,
except for (i) applicable requirements, if any, of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the HSR Act), the Securities Exchange Act of 1934, as amended (the
Exchange Act), the Securities Act of 1933, as amended (the Securities Act), and
the rules and regulations thereunder, (ii) requirements under the rules of the Nasdaq Stock Market,
and (iii) the filing and recordation of appropriate merger documents as required by the DGCL and
the business organization Laws of the jurisdictions where the Company is qualified to do business
as a foreign corporation.
3.06 Compliance with Laws; Permits.
(a) The Company and each Subsidiary is, and since October 15, 2006 has been, in compliance in
all material respects with all Laws applicable to the Company or such Subsidiary or by which any
property or asset of the Company or such Subsidiary is bound or affected. The Company and the
Subsidiaries have timely filed all reports, data and other information required to be filed with
the Governmental Authorities with respect to the Company and each Subsidiary, except where the
failure to make such timely filing would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as set forth in Section 3.06(b) of the Company Disclosure Schedule, there
is no material suit, claim, action, proceeding, arbitration, or, to the Companys Knowledge,
investigation (each, an Action) pending before any court, tribunal, or judicial or
arbitral body, or to the Companys Knowledge, any other Governmental Authority or, to the Companys
Knowledge, threatened by any Governmental Authority, with respect to the Company or any Subsidiary
or any properties or assets of the Company or of any Subsidiary, or, to the Companys Knowledge,
any current or former supervisory employee of the Company or any Subsidiary with respect to any
acts or omissions as an employee of the Company or any Subsidiary.
(c) Except as set forth on Section 3.06(c) of the Company Disclosure Schedule, the
Company and each Subsidiary has all material permits, licenses, certifications, approvals and
franchises (each, a Permit) necessary for the Company or such Subsidiary to own, lease
and operate its properties or to carry on its business as it is now being conducted. No
suspension, cancellation or materially adverse modification of any material Permit is pending or,
to the Companys Knowledge, threatened. The Company and each Subsidiary is in material compliance
with the terms of the Permits.
(d) The Company and each Subsidiary is, and since October 15, 2006 has been, in material
compliance with (i) all applicable statutes, rules and regulations of the Medicare and Medicaid
programs; (ii) all applicable state Laws relating to health care fraud and abuse; (iii) all
applicable federal or state Laws relating to billing or claims for reimbursement submitted to any
third party payor; and (iv) all applicable federal and state Laws relating to privacy or
confidentiality of health records or personal health information.
(e) The Company has delivered or made available to Parent accurate and complete copies of the
Companys and any applicable Subsidiarys material compliance program documents. Neither the
Company nor any Subsidiary (i) has been assessed a civil money penalty under Section 1128A of the
Social Security Act, 42 U.S.C. §1320a-7a, or any regulations
12
promulgated thereunder, (ii) has been
convicted of any criminal offense relating to the delivery of any item or service under a Federal
Health Care Program, as that term is defined in Section 1128B(f) of the Social Security Act, 42
U.S.C. §1320a-7b(f), relating to the unlawful manufacture, distribution, prescription, or
dispensing of a prescription drug or a controlled substance, (iii) is a party to an outstanding
Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and
Human Services, or (iv) has reporting obligations pursuant to any settlement agreement entered into
with any Governmental Authority.
(f) The Company and the Subsidiaries, as applicable, (i) (A) are appropriately certified for
participation in, have current and valid provider contracts with, and are in material compliance
with the applicable conditions of participation for such the Medicare and Medicaid programs, the
CHAMPUS/TRICARE Program (if applicable), and such other similar Federal, state or local
governmental health care programs (collectively, the Governmental Programs) as necessary
to carry on their respective businesses as they are now being conducted and (ii) currently
participate in private, non-governmental health care programs (including private insurance health
care programs) (the Private Programs) under which the Company and the Subsidiaries
directly or indirectly receives payments for health care items and services. To the Companys
Knowledge, all billing practices of the Company and the Subsidiaries have been in material
compliance with applicable Law, regulation and written policies of Governmental Programs and
Private Programs. To the
Companys Knowledge, (A) neither the Company nor any Subsidiary has received any material
payment or reimbursement in excess of amounts allowed by Law, and (B) neither the Company nor any
Subsidiary is liable for recoupment of material amounts previously paid by a Governmental Program
or a Private Program in which the Company or any Subsidiary participates or has participated in the
past three (3) years that are not reflected in the Financial Statements, except for routine claims
processing and adjudication in the ordinary course of business or where such overpayment is a
result of an administrative error by a Governmental Program or a Private Program. Except as set
forth in Section 3.06(e) of the Company Disclosure Schedule, no surveys of any of the
Company, the Subsidiaries or their respective predecessors in interest that related to the
respective businesses of such entities and that were conducted in connection with any Governmental
Program, Private Program or license (excluding individual employee licenses), accreditation, permit
or certificate during the past three (3) years, required material corrective action to be taken by
the Company, Subsidiary, or their respective predecessors.
(g) To the Companys Knowledge, neither the Company nor any Subsidiary, nor any of their
directors, members, employees, officers, managers or independent contractors who currently furnish
services or supplies that may be reimbursed in whole or in part under any Governmental Program: (i)
has been convicted of or charged with any violation of any Law related to any Governmental Program;
or (ii) is excluded, suspended or debarred from participation in any Federal Health Care Program.
The Company reviews (A) the list of Excluded Individuals/Entities on the website of the United
States Health and Human Services Office of Inspector General
(http://oig.hhs.gov/fraud/exclusions.html), and (B) the List of Parties Excluded From Federal
Procurement and Nonprocurement Programs on the website of the United States General Services
Administration (http://www.arnet.gov/epls/) with regard to the exclusion status of its directors,
members, employees, officers, managers or independent contractors.
13
(h) Notwithstanding anything in this Agreement to the contrary, this Section 3.06
contains the sole and exclusive representations and warranties of the Company and the Subsidiaries
with respect to (i) compliance with health care Laws and health care Permits, (ii) the Companys
and the Subsidiaries participation in, billing of and reimbursement from Governmental Programs, to
the extent related to its compliance with Laws with respect to such activities, and (iii) the
Companys and the Subsidiaries participation in, billing of and reimbursement from Private
Programs, to the extent related to its compliance with such Private Programs regulations and
policies.
3.07 SEC Filings; Financial Statements; Undisclosed Liabilities, Internal Controls.
(a) Since June 22, 2005, the Company has timely filed with or furnished to, as applicable, the
Securities and Exchange Commission (the SEC) all forms, reports, statements, schedules
and other documents required to be filed or furnished by it pursuant to the U.S. securities Laws
and the rules and regulations thereunder (collectively, the SEC Reports). Except as set
forth in Section 3.07(a) of the Company Disclosure Schedule, the SEC Reports (i) were
prepared in all material respects in accordance with either the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations promulgated thereunder and (ii)
did not, at the time they were filed, or, if amended or supplemented, as of the date of such
amendment or supplement, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading. There are
no unresolved comments issued by the staff of the SEC with respect to any of the SEC Reports. To
the Knowledge of the Company, as of the date hereof, none of the SEC Reports is the subject of
ongoing SEC review, outstanding SEC comment or outstanding SEC investigation. No Subsidiary is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each case, any notes thereto)
contained in the SEC Reports, as amended or supplemented, including any amendments or restatements
thereto, was prepared in all material respects in accordance with published rules and regulations
of the SEC (including Regulation S-X) and United States generally accepted accounting principles
(GAAP) applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited interim statements, the omission of
footnotes and otherwise as permitted by Form 10-Q of the SEC) and each fairly presents, in all
material respects, the consolidated financial position, results of operations and cash flows of the
Company and the Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein, except that the unaudited interim statements are subject to normal and recurring
year-end adjustments, none of which were, or are expected to be, material in amount. The per
share exercise price of each Option is equal to the fair market value of a share of common stock on
the date such Option was granted, and each such grant was properly accounted for in accordance with
GAAP in the consolidated financial statements of the Company contained in the SEC Reports.
(c) Except as set forth in Section 3.07(c) of the Company Disclosure Schedule, neither
the Company nor any Subsidiary has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except (i) liabilities reflected, reserved for or disclosed in
the most recent consolidated balance sheet of the Company and the Subsidiaries,
14
including the notes thereto, contained in the most recent SEC Report filed prior to the date of this Agreement, (ii)
liabilities incurred or accrued in the ordinary course of business consistent with past practice,
(iii) liabilities incurred in connection with the Transactions, and (iv) liabilities that would not
reasonably be expected to have a Material Adverse Effect.
(d) The Company has established and maintains a system of internal control over financial
reporting (as defined in and required by Rule 13a-15 under the Exchange Act). Except as disclosed
in the Latest 10-K, such internal controls are sufficient to provide reasonable assurance regarding
the reliability of the Companys financial reporting and the preparation of Company financial
statements for external purposes in accordance with GAAP. The Companys principal executive
officer and its principal financial officer have disclosed, based on their most recent evaluation,
to the Companys auditors and the audit committee of the Company Board (i) all significant
deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting known to such persons that are reasonably likely to adversely affect the Companys
ability to record, process, summarize and report financial information and (ii) any fraud, whether
or not material, known to such persons that involves management or other employees who have a
significant role in the Companys internal control over financial reporting, and the Company has
provided to Parent copies of any material written materials relating to the foregoing.
(e) The Company maintains disclosure controls and procedures (as such term is defined in
Rules 13a-15 and 15d-15(e) under the Exchange Act) as required by Rule 13a-15 under the Exchange
Act and such disclosure controls and procedures are designed to ensure that (i) material
information (both financial and non-financial) required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC and (ii) all such
information is accumulated and communicated with the Companys management as appropriate to allow
timely decisions regarding required disclosure and to make the certifications of the principal
executive officer and principal financial officer of the Company required under the Exchange Act
with respect to such reports.
(f) The records, systems, controls, data and information of the Company and the Subsidiaries
are recorded, stored, maintained and operated under means (including any electronic, mechanical or
photographic process, whether computerized or not) that are under the exclusive ownership and
direct control of the Company or the Subsidiaries or their accountants (including all means of
access thereto and therefrom), except for any non-exclusive ownership and non-direct control that
would not reasonably be expected to have a material adverse effect on the Companys system of
internal accounting controls.
(g) Neither the Company nor any Subsidiary has made any loans prohibited by the Sarbanes-Oxley
Act to any executive officer of the Company (as defined in Rule 3b-7 under the Exchange Act) or
director of the Company or any Subsidiary. There are no outstanding loans or other extensions of
credit, other than cash advances for reimbursable travel and other business
expenses, made by the Company or any Subsidiary to any executive officer of the Company or any
Subsidiary (as defined in Rule 3b-7 under the Exchange Act) or director of the Company or any
Subsidiary.
15
3.08 Absence of Certain Changes or Events. Except as set forth in Section
3.08 of the Company Disclosure Schedule or as expressly contemplated by this Agreement, since
September 30, 2009, (a) the Company and each Subsidiary has conducted its business in the ordinary
course of business consistent with past practice, and (b) there has not been any Material Adverse
Effect. Except as set forth in Section 3.08 of the Company Disclosure Schedule or as
expressly contemplated by this Agreement, since June 30, 2009, the Company has not taken any action
that would be prohibited by Sections 5.01(b)(i), (d), (e), (g),
(h), (k), or (l) if proposed to be taken after the date hereof.
3.09 Litigation. Except as set forth in Section 3.09 of the Company
Disclosure Schedule, there is no Action pending before any court, tribunal, or judicial or arbitral
body, or to the Companys Knowledge, any other Governmental Authority or, to the Companys
Knowledge, threatened, against the Company or any Subsidiary or any properties or assets of the
Company or any Subsidiary, or, to the Companys Knowledge, any current or former supervisory
employee of the Company or any Subsidiary with respect to any acts or omissions as an employee of
the Company or any Subsidiary, except for Actions that, if determined adversely to the Company or
any Subsidiary, would not individually or in the aggregate have a Material Adverse Effect. Except
as set forth in Section 3.09 of the Company Disclosure Schedule, neither the Company nor
any Subsidiary is subject to or bound by any outstanding Order.
3.10 Labor and Employment Matters. (a) Neither the Company nor any Subsidiary is a
party to any collective bargaining agreement or other labor union contract applicable to employees
of the Company or any Subsidiary, (b) to the Companys Knowledge, there are no activities or
proceedings of any labor union to organize any employees of the Company or any Subsidiary or any
current union representation questions involving such employees, (c) there is no labor strike,
controversy, slowdown, work stoppage or lockout occurring, or, to the Companys Knowledge,
threatened by or with respect to any employees of the Company or any Subsidiary, (d) there are no
unfair labor practice complaints pending or, to the Companys Knowledge, threatened against the
Company or any Subsidiary before the National Labor Relations Board or any other Governmental
Authority, (e) no charges with respect to or relating to the Company or any Subsidiary are pending
or, to the Companys Knowledge, threatened before the Equal Employment Opportunity Commission or
any other Governmental Authority, and (f) there is no claim with respect to payment of wages,
salary or overtime pay that has been asserted or is pending or, to the Companys Knowledge,
threatened before any Governmental Authority with respect to any current or former employees of the
Company or any Subsidiary, except, with respect to clauses (c) through (f) of this Section
3.10, to the extent any such matter would not, individually or in the aggregate, have a
Material Adverse Effect.
3.11 Employee Benefit Plans.
(a) Section 3.11(a) of the Company Disclosure Schedule sets forth a true and complete
list of all (i) employee pension benefit plans (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended (ERISA)), (ii) employee welfare
benefit plans (as defined in Section 3(1) of ERISA), (iii) other bonus, deferred compensation,
pension, profit-sharing, retirement, insurance, stock purchase, stock option, vacation pay, sick
pay or other fringe benefit plan, employment, consulting, severance, retention, termination or
change-of-control agreements, arrangements or understandings, or practice and
16
any other benefit or compensation plan, program, agreement or arrangement, in each case maintained, sponsored, or
contributed or required to be contributed to, by the Company or any Subsidiary for the benefit of
any of the current or former employees, independent contractors, directors or officers of the
Company or any Subsidiary or any of their dependents (collectively, the Employees), or
with respect to which the Company or any Subsidiary has any current or potential liability or
obligation (collectively, the Benefit Plans). The Company has furnished or made
available to Parent and Merger Sub correct and complete copies of (i) each Benefit Plan, (ii) the
most recent annual report on Form 5500 filed with the Internal Revenue Service with respect to each
Benefit Plan (if applicable) (and all attachments thereto), (iii) the most recent summary plan
description for each Benefit Plan for which such summary plan description is required, (iv) each
trust agreement and group annuity contract or other funding arrangement relating to any Benefit
Plan, and (v) in the case of any plan that is intended to be qualified under Section 401(a) of the
Code, the most recent determination letter (and if a prototype plan, an opinion letter), if any,
received from the Internal Revenue Service.
(b) None of the Benefit Plans is, and none of the Company, any Subsidiary or any ERISA
Affiliate has ever maintained or had an obligation to contribute to or has any current or potential
liability or obligation under or with respect to, (i) a single employer plan (as such term is
defined in Section 4001(a)(15) of ERISA) subject to Section 412 of the Code or Section 302 of Title
I of ERISA or Title IV of ERISA, (ii) a multiple employer plan (as such term is defined in
ERISA), (iii) a multiemployer plan (as such term is defined in Section 3(37) of ERISA), (iv) a
funded welfare benefit plan (as such term is defined in Section 419 of the Code) or (v) any plan,
program, agreement or arrangement that provides for post-retirement or post-termination health or
life insurance or other welfare-type benefits (other than health continuation coverage required by
Section 4980B of the Code or similar state Law, any Benefit Plan that provides disability benefits,
or any benefit for which the covered individual pays the entire cost of coverage). For purposes of
this Agreement, the term ERISA Affiliate means any Person that, together with the Company
or any Subsidiary would at any relevant time be deemed a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code. The Company and the Subsidiaries have complied and
are in compliance in all material respects with the requirements of Section 4980B of the Code.
(c) Except as set forth in Section 3.11(c) of the Company Disclosure Schedule, each
Benefit Plan and all related trusts, insurance contracts and funds have been maintained, funded and
administered in all material respects in accordance with the terms of such Benefit Plan and in
material compliance with the applicable provisions of ERISA, the Code and other applicable Laws.
Each Benefit Plan that is intended to meet the requirements of a qualified
plan under Section 401(a) of the Code (i) has received a favorable determination letter from
the Internal Revenue Service, (ii) is entitled to rely on a favorable opinion letter issued by the
Internal Revenue Service, or (iii) has a remedial amendment period that has not yet expired during
which the Company may file for a favorable determination letter with respect to all provisions of
such Benefit Plan. Nothing has occurred that could reasonably be expected to adversely affect the
qualification of such Benefit Plan. With respect to each Benefit Plan, all contributions or
payments (including all employer contributions, employee salary reduction contributions and premium
payments) that are due have been made within the time periods prescribed by the terms of each
Benefit Plan, ERISA, the Code and other applicable Law.
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(d) None of the Company, any Subsidiary or, to the Companys Knowledge, any other Person has
engaged in a prohibited transaction (as such term is defined in Section 406 of ERISA or Section
4975 of the Code) or any breach of fiduciary responsibility with respect to any Benefit Plan that
could reasonably be expected to subject the Company or any Subsidiary or the Employees to any
material tax, penalty or other liability imposed by the Code or ERISA. With respect to any Benefit
Plan: (i) no filing, application or other matter is pending with the Internal Revenue Service, the
Pension Benefit Guaranty Corporation, the United States Department of Labor or any other
Governmental Authority and (ii) there is no action, suit, investigation, audit, proceeding, inquiry
or claim pending or, to the Companys Knowledge, threatened, other than routine claims for
benefits, with respect to any Benefit Plan.
(e) Except as set forth in Section 3.11(e) of the Company Disclosure Schedule, neither
the execution or delivery of this Agreement nor the consummation of the Transactions will result in
any payment or funding, accelerate the time of payment or vesting, or increase the amount, of
compensation or benefits to any Person under the Benefit Plans.
3.12 Real Property; Assets.
(a) Except as set forth in Section 3.12(a) of the Company Disclosure Schedule, the
Company or a Subsidiary has good and marketable title to all material assets owned by the Company
and the Subsidiaries (the Owned Assets), free and clear of all Liens, other than (i)
Liens for current Taxes not yet past due and payable and liens for Taxes that are being contested
in good faith by appropriate proceedings for which appropriate reserves have been established in
accordance with GAAP, (ii) mechanics and materialmens Liens for construction in progress for
amounts not yet past due and payable, (iii) workmens, repairmens, warehousemens and carriers
Liens arising in the ordinary course of business of the Company or the Subsidiary consistent with
past practice, for amounts not yet past due and payable, and (iv) easements, covenants, conditions,
restrictions and similar matters of record not violated by the current use or occupancy of the
Owned Assets or the operation of the business of the Company or the Subsidiaries (collectively,
Permitted Liens). The buildings, structures, improvements, fixtures, machinery,
equipment, personal properties, vehicles and other tangible assets owned by the Company and the
Subsidiaries (other than assets that are not necessary for the operation of the business of the
Company and the Subsidiaries) have been installed, maintained and operated in conformity with all
applicable Laws, regulations and insurance policies (except as would not, individually or in the
aggregate, have a Material Adverse Effect), are in good condition and repair (reasonable wear and
tear excepted), are usable in the ordinary course of business, and to the Companys Knowledge,
there are no latent defects with respect thereto. The properties and assets owned, leased or used by the Company or any
Subsidiary, both tangible and intangible, are sufficient and adequate to carry on their respective
businesses in all material respects as presently conducted.
(b) Neither the Company nor any Subsidiary owns any real property.
(c) Section 3.12(c) of the Company Disclosure Schedule sets forth a true and complete
list of all leases, subleases, licenses, concessions and other agreements (written or oral) (the
Leases) pursuant to which the Company or any Subsidiary holds any leasehold or
subleasehold estate or other right to use or occupy any land, buildings, structures, improvements,
18
fixtures or other interest in real property (the Leased Real Property). The Company has
furnished or made available to Parent and Merger Sub a true and complete copy of each written Lease
(including all material amendments, extensions, renewals, guaranties and other agreements with
respect thereto) for Leased Real Property, and in the case of any oral Lease for Leased Real
Property, a written summary of the material terms of such Lease. Except as set forth in
Section 3.12(c) of the Company Disclosure Schedule or as would not have a Material Adverse
Effect, the Company or a Subsidiary has a good and valid leasehold interest in each Leased Real
Property. Except as set forth in Section 3.12(c) of the Company Disclosure Schedule, (i)
to the Companys Knowledge, the Company or a Subsidiary has the right to use and occupancy of the
Leased Real Property for the full term of the lease or sublease relating thereto, (ii) each Lease
is a legal, valid and binding obligation, enforceable in accordance with its terms, of the Company
or a Subsidiary and, to the Companys Knowledge, the other parties thereto, and none of the
Company, any Subsidiary or, to the Companys Knowledge, any other party thereto, is in default
(with or without notice or lapse of time, or both) with respect to any Lease for Leased Real
Property, (iii) neither the Company nor any Subsidiary has assigned its interest under any Lease or
sublet any part of the premises covered thereby, and (iv) the other party to any Lease is not an
affiliate of, and otherwise does not have any economic interest in, the Company or any Subsidiary.
(d) There are no pending or, to the Companys Knowledge, threatened condemnation proceedings
with respect to the Owned Assets or Leased Real Property.
3.13 Intellectual Property.
(a) Section 3.13(a) of the Company Disclosure Schedule sets forth a true and complete
list of U.S. and foreign (i) issued patents and patent applications, (ii) trademark registrations
and applications, (iii) Internet domain name registrations, (iv) and copyright registrations and
applications, in each case that are owned by the Company or any Subsidiary.
(b) Except as set forth in Section 3.13(b) of the Company Disclosure Schedule and
except as would not have a Material Adverse Effect, the Company or a Subsidiary owns and possesses
all right, title and interest in and to, or has a valid and enforceable license to use pursuant to
a written license agreement, all other intellectual property (including all trade names) necessary
to conduct their respective businesses (such intellectual property and the rights thereto are
collectively referred to herein as the IP Rights).
(c) To the Companys Knowledge, (i) the businesses of the Company and the Subsidiaries do not
infringe, misappropriate or otherwise violate any third partys intellectual
property rights, and there is no such claim pending or threatened against the Company or any
Subsidiary, and (ii) no third party is infringing, misappropriating or otherwise violating the IP
Rights, and there is no such claim pending or threatened against any Person by the Company or any
Subsidiary.
(d) The Company and the Subsidiaries take commercially reasonable measures to maintain and
protect (i) all of their respective IP Rights, and (ii) the confidentiality of their respective
trade secrets, patient and other personal data and to prevent unauthorized access to trade secrets,
patient and other personal data.
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(e) To the Companys Knowledge, the Company has not experienced any incident in which personal
information of consumers was or may have been stolen or improperly accessed, and the Company is not
aware of any facts suggesting the likelihood of the foregoing, including without limitation any
breach of security or any notices or complaints from any Person regarding personal information.
3.14 Taxes.
(a) For purposes of this Agreement, Tax or Taxes refers to any and all
federal, state, local and foreign taxes, assessments and other governmental charges, duties,
impositions and levies, including, without limitation, taxes based upon or measured by gross
receipts, income (gross or net), profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, real property, excise and
property taxes, together with all interest, penalties and additions imposed with respect to such
amounts. For purposes of this Agreement, Tax Return or Tax Returns refers to
all federal, state, local and foreign returns, schedules, attachments, estimates, information
statements and reports relating to Taxes, and any amendments thereto, including any return of an
affiliated, combined or unitary group that includes the Company or any Subsidiary.
(b) The Company and the Subsidiaries have filed all Tax Returns required to be filed by them
prior to the date hereof. All such Tax Returns are correct and complete in all material respects.
All Taxes shown as due on such Tax Returns have been timely paid. Neither the Company nor any
Subsidiary currently is the beneficiary of any extension of time within which to file any Tax
Return. There are no liens for Taxes upon any property or assets of the Company or the
Subsidiaries, except (i) liens for Taxes not yet due and payable and (ii) liens for Taxes that are
being contested in good faith by appropriate proceedings and for which adequate reserves are being
maintained in accordance with GAAP.
(c) Proper accruals pursuant to GAAP have been established (and until the Closing Date will be
maintained) on the Companys consolidated financial statements adequate to pay all material Taxes
of the Company and the Subsidiaries not yet due and payable.
(d) Except as set forth in Section 3.14(d) of the Company Disclosure Schedule, (i) no
deficiencies for Taxes with respect to the Company or any Subsidiary has been claimed, proposed or
assessed by a Tax authority or other Governmental Authority in writing, (ii) no audit or other
proceeding for or relating to any liability in respect of Taxes of the Company or any
Subsidiary is being conducted by any Tax authority or Governmental Authority and neither the
Company nor any Subsidiary has received notification in writing that any such audit or other
proceeding is pending, and (iii) neither the Company nor any Subsidiary has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.
(e) Except as set forth in Section 3.14(e) of the Company Disclosure Schedule, neither
the Company nor any Subsidiary is a party to any agreement, contract, arrangement or plan that has
resulted or would result, separately or in the aggregate, in any payment that would not be
deductible pursuant to Sections 162(m) or 280G of the Code (or any corresponding provision of
state, local or foreign Tax Law).
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(f) The Company has not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(g) Neither the Company nor any Subsidiary has any liability for the Taxes of any Person
(other than members of the consolidated group of which the Company is the common parent) (i) under
Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or foreign Law),
(ii) as a transferee or successor, (iii) by contract, or (iv) otherwise.
(h) During the three (3) year period ending on the Closing Date, neither the Company nor any
Subsidiary was a distributing corporation or a controlled corporation in a transaction intended to
be governed by Section 355 of the Code.
(i) Neither the Company nor any Subsidiary has entered into any transaction identified as a
listed transaction for purposes of Treasury Regulations Section 1.6011-4(b)(2).
(j) Neither the Company nor any Subsidiary will be required to include any item of income in,
or exclude any item of deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any (A) change in method of accounting for a taxable
period ending on or prior to the Closing Date; (B) closing agreement as described in Section 7121
of the Code (or any corresponding or similar provision of income Tax Law) executed on or prior to
the Closing Date; (C) intercompany transactions or any excess loss account described in Treasury
Regulations under Section 1502 of the Code (or any similar provision of state, local, or foreign
Law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or
(E) election to defer cancellation of debt income under Section 108(i) of the Code.
3.15 Environmental Matters.
(a) As used in this Agreement, Environmental Laws shall mean all federal, state and
local statutes, regulations, ordinances and other requirements having the force or effect of law,
all judicial and administrative orders and determinations, and all common law concerning public
health and safety, worker health and safety, pollution, or protection of the environment, as the
foregoing are enacted or in effect, on or prior to the Closing Date.
(b) The Company and the Subsidiaries have complied in all material respects with, and are in
compliance in all material respects with, all Environmental Laws applicable to their businesses as
presently or previously conducted, including without limitation obtaining, maintaining, and
complying with all environmental permits required for the occupation of the Companys or the
Subsidiaries properties or facilities. Neither the Company nor any Subsidiary has received any
notice, report or other information regarding any violation of, or liability under, Environmental
Laws, including without limitation with respect to its past or current operations, properties or
facilities. Neither the Company nor any Subsidiary, nor, to the Companys Knowledge, any
predecessor or affiliate of the Company or the Subsidiaries, has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, exposed any Person to or released
any substance, or owned or operated its business or any property or facility (and no such property
or facility is contaminated by any such substance), in each case, so as to have
21
given rise to or as would give rise to any liabilities or investigative, corrective or remedial obligations pursuant to
CERCLA or any other Environmental Laws.
(c) Neither the Company nor any Subsidiary has assumed, undertaken, provided an indemnity with
respect to, or otherwise become subject to, any liability of any other Person relating to
Environmental Laws.
(d) Neither the Company nor any Subsidiary has designed, manufactured, distributed or sold
products or items containing asbestos, silica, lead, mercury, or other similar hazardous materials,
and neither the Company nor any Subsidiary has any liability (contingent or otherwise), with
respect to the presence or alleged presence of asbestos, silica, lead, mercury, or other similar
hazardous materials in any product or item or at or upon any property or facility.
(e) The Company has furnished or made available to Parent and Merger Sub all environmental
audits, reports and other material environmental documents, if any, relating to the Company and the
Subsidiaries, or their past or current operations, properties or facilities that are in their
possession or under their reasonable control.
3.16 Material Contracts.
(a) For all purposes of and under this Agreement, a Material Contract means any oral
or written:
(i) material contract (as such term is defined in Item 601(b)(10) of Regulation S-K under
the Exchange Act, other than those agreements and arrangements described in Item 601(b)(10)(iii))
with respect to the Company and the Subsidiaries, taken as whole;
(ii) employment or consulting contract (in each case, under which the Company or any
Subsidiary has continuing obligations as of the date hereof) with any current or former executive
officer or other employee of the Company or the Subsidiaries or member of the Company Board
providing for an annual base salary in excess of $150,000;
(iii) Benefit Plan, any of the benefits of which will be increased, or the vesting of benefits
of which will be accelerated, by the consummation of the Transactions or the value of any of the
benefits of which will be calculated on the basis of any of the Transactions;
(iv) contract that contains severance or termination pay liabilities of the Company or any
Subsidiary related to termination of employment;
(v) contract that provides for indemnification by the Company or the Subsidiaries of any
officer, director or employee of the Company or the Subsidiaries;
(vi) contract containing any covenant (A) limiting the right of the Company or any Subsidiary
to engage in any line of business or to compete with any Person in any line of business or in any
geographic location, or (B) prohibiting the Company or any Subsidiary from engaging in business
with any Person or levying a fine, charge or other payment for doing so;
22
(vii) contract entered into after January 1, 2007 or that has not yet been consummated (A)
relating to the disposition or acquisition by the Company or any Subsidiary after the date of this
Agreement of a material amount of assets other than in the ordinary course of business, or (B)
pursuant to which the Company or any Subsidiary will acquire any material ownership interest in any
other Person or other business enterprise other than the Subsidiaries;
(viii) mortgages, indentures, guarantees for borrowed money, loans or credit agreements,
security agreements or other contracts relating to the borrowing of money or extension of credit
(whether incurred, assumed, guaranteed or secured by any asset), other than (A) accounts
receivables and payables, and (B) loans to direct or indirect wholly owned Subsidiaries, in each
case in the ordinary course of business consistent with past practice;
(ix) contract pursuant to which the Company or any Subsidiary has continuing earn-out or
other contingent payment obligations;
(x) contract to which the Company or any Subsidiary is a party that (A) contains most favored
customer pricing provisions or (B) grants any exclusive rights, rights of first refusal, rights of
first negotiation or similar rights to any Person;
(xi) contract to which the Company or any Subsidiary is a party that relates to product
supply, manufacturing, distribution or development (except for any contracts in which either the
annual aggregate noncontingent payments to or by the Company are not in excess of $250,000 or the
annual potential payments to or by the Company are not expected to exceed $250,000);
(xii) contract pursuant to which the Company or any Subsidiary has any obligations or
liabilities (whether absolute, accrued, contingent or otherwise) as guarantor, surety, co-signer,
endorser, co-maker, or otherwise in respect of any obligation of any other Person, or any capital
maintenance, keep-well or similar agreements or arrangements, in each case individually in excess
of $250,000;
(xiii) contract that involves any joint venture, partnership or similar arrangement of the
Company or any Subsidiary;
(xiv) material agreement with respect to intellectual property; or
(xv) contract that contains standstill or similar provisions to which the Company or any
Subsidiary is subject and restricted.
(b) Section 3.16(b) of the Company Disclosure Schedule contains a complete and
accurate list of all Material Contracts (including any amendments thereto) to or by which the
Company or any Subsidiary is a party or is bound. Complete and correct copies of each Material
Contract (including any amendments thereto) in existence as of the date hereof have been delivered
or made available by the Company to Parent and Merger Sub prior to the date hereof.
(c) Except as set forth in Section 3.16(c) of the Company Disclosure Schedule and
except as would not have a Material Adverse Effect, all of the Material Contracts are valid and
binding on the Company (and/or each Subsidiary party thereto) and are in full force and
23
effect, and neither the Company nor any Subsidiary party thereto, nor, to the Knowledge of the Company, any
other party thereto, is in breach of, or default under, any such Material Contract, and no event
has occurred that with notice or lapse of time or both would reasonably be expected to (i)
constitute such a breach or default thereunder by the Company or any Subsidiary party thereto, or,
to the Knowledge of the Company, any other party thereto; or (ii) give any Person the right to
declare a default, accelerate the maturity or performance of any Material Contract, or cancel,
terminate or modify any Material Contract.
3.17 Insurance. Section 3.17 of the Company Disclosure Schedule sets forth a
complete and correct list of all material insurance policies owned or held by the Company or any
Subsidiary. With respect to each such insurance policy, (i) the policy is legal, valid and binding
and enforceable in accordance with its terms and, except for policies that have expired under their
terms in the ordinary course, is in full force and effect; (ii) neither the Company nor any
Subsidiary is in material breach or default under the policy, except for such breaches or defaults
as would not have a Material Adverse Effect; and (iii) no notice of cancellation or termination has
been received other than in connection with ordinary renewals. There is no material claim pending
under any of such policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies, and there has been no threatened termination of, or material premium
increase with respect to, any such policies.
3.18 Affiliated Transactions. Except as set forth in Section 3.18 of the
Company Disclosure Schedule, neither the Company nor any Subsidiary has entered into any agreement,
commitment or transaction with or for the benefit of the Companys affiliates that would be
required to be disclosed under Item 404 of Regulation S-K under the Securities Act.
3.19 Information in Proxy Statement.
(a) Each document required to be filed by the Company with the SEC in connection with the
Transactions (the Company Disclosure Documents), including, without limitation, the proxy
or information statement of the Company containing information required by Regulation 14A under the
Exchange Act, and, if applicable, Rule 13e-3 and Schedule 13E-3 under the Exchange Act (together
with all amendments and supplements thereto, the Proxy Statement), will,
when filed, comply as to form in all material respects with the applicable requirements of the
Exchange Act. The representations and warranties contained in this Section 3.19(a) will
not apply to statements or omissions included in the Company Disclosure Documents based upon
information furnished to the Company in writing by Merger Sub or Parent or any of their
representatives specifically for use therein.
(b) At the time the Proxy Statement or any amendment or supplement thereto is filed with the
SEC, at the time the Proxy Statement is first mailed to stockholders of the Company and at the time
of the Stockholders Meeting (as defined in Section 5.02), the Proxy Statement, as
supplemented or amended, will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the filing of any Company
Disclosure Document other than the Proxy Statement and at the time of any distribution thereof,
such Company Disclosure Document will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements made
24
therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties
contained in this Section 3.19(b) will not apply to statements or omissions included in the
Company Disclosure Documents based upon information furnished to the Company in writing by Merger
Sub or Parent or any of their representatives specifically for use therein.
3.20 Required Stockholder Vote. The adoption of this Agreement at the Stockholders
Meeting by the holders of a majority of the issued and outstanding shares of Common Stock entitled
to vote at the Stockholders Meeting (the Stockholder Approval) is the only vote of the
holders of any class or series of the Companys securities necessary to adopt and approve this
Agreement, the Merger and the other Transactions.
3.21 Opinion of Financial Advisor. The Company has received the written opinion of
Raymond James & Associates, Inc. (the Financial Advisor), dated as of October 18, 2009,
to the effect that, as of October 18, 2009, and based upon and subject to the factors and
assumptions set forth therein, the Merger Consideration is fair, from a financial point of view, to
the Companys stockholders, excluding those stockholders entering into the Voting Agreements or the
Exchange Agreements and their affiliates, as well as Parent, Merger Sub and their affiliates, a
copy of which opinion will be delivered to Parent solely for informational purposes after receipt
thereof by the Company.
3.22 Brokers. Except for the engagement of the Financial Advisor, none of the
Company, the Subsidiaries, or any of their respective officers, directors or employees has employed
any broker, finder or investment banker or incurred any brokerage, finders or other fee or
commission in connection with the Transactions. The Company has furnished to Parent and Merger Sub
a complete and correct copy of all agreements between the Company and any broker, finder or
investment banker, including the Financial Advisor, pursuant to which such firms would be entitled
to any payment relating to the Transactions.
3.23 Payors and Vendors.
(a) Section 3.23(a) of the Company Disclosure Schedule sets forth a complete and
correct list of the five (5) largest payors of the Company and the Subsidiaries (determined on a
consolidated basis based on the amount of revenues received by the Company and the Subsidiaries)
(the Material Payors) for (i) each of the two (2) most recent fiscal years and (ii) the
six (6) months ended June 30, 2009, and sets forth opposite the name of each Material Payor the
approximate percentage of consolidated net sales attributable to such Material Payor during such
period. Except as set forth in Section 3.23(a) of the Company Disclosure Schedule, since
December 31, 2008, no Material Payor has (A) cancelled or otherwise terminated, its relationship
with the Company or the Subsidiaries or (B) provided the Company or any Subsidiary an express
written notice or express oral statement that any such Material Payor intends to cancel or
materially modify in an adverse manner its relationship with the Company or the Subsidiaries.
(b) Section 3.23(b) of the Company Disclosure Schedule sets forth a complete and
correct list of the ten (10) largest vendors, suppliers, service providers and other similar
business relations of the Company and the Subsidiaries (determined on a consolidated basis based on
the amount paid by the Company and the Subsidiaries) (the Material Vendors) for (i)
25
each of the two (2) most recent fiscal years and (ii) the six (6) months ended June 30, 2009 and sets
forth opposite the name of each Material Vendor the approximate amount paid to such vendor during
such period. Since December 31, 2008, no Material Vendor has (A) cancelled or otherwise terminated
its relationship with the Company or the Subsidiaries or (B) provided the Company or any Subsidiary
an express written notice or express oral statement that such Material Vendor intends to cancel or
materially modify in an adverse manner its relationship with the Company or any Subsidiary.
3.24 Anti-Takeover Provisions; No Rights Agreement.
(a) The Company Board has taken all necessary action so that the restrictions of Section 203
of the DGCL and any applicable takeover, anti-takeover, moratorium, fair price, control share
or other similar Law (each, a Takeover Statute) do not, and will not, apply to this
Agreement, the Merger or the other Transactions.
(b) The Company does not have any stockholder rights plan in effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent Disclosure Schedule, Parent and Merger Sub represent and
warrant (which representations and warranties shall be deemed to include the disclosure specified
in the Parent Disclosure Schedule, and it being understood that any matter disclosed in any section
of the Parent Disclosure Schedule shall be deemed disclosed in each representation and warranty
where the relevance of such disclosure is reasonably apparent on its face, without
regard to whether a representation or warranty specifically references the Parent Disclosure
Schedules) to the Company as follows:
4.01 Organization and Qualification. Each of Merger Sub and Parent is a corporation
duly organized, validly existing and in good standing (to the extent applicable) under the Laws of
its jurisdiction of formation and has the requisite power and authority to carry on its business as
now being conducted, except where the failure to be in good standing would not reasonably be
expected to have a Material Adverse Effect. Each of Merger Sub and Parent is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction
where the nature of its business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed and in good standing would not reasonably be expected to
have a Material Adverse Effect.
4.02 Charter Documents and Bylaws. Parent has delivered to the Company a complete and
correct copy of the certificate of incorporation and the bylaws of Parent in full force and effect
as of the date hereof. Parent is not in violation of any of the provisions of its certificate of
incorporation or bylaws. Parent has heretofore delivered to the Company a complete and correct
copy of the certificate of incorporation and the bylaws of Merger Sub in full force and effect as
of the date hereof. Merger Sub is not in violation of any of the provisions of its certificate of
incorporation or bylaws.
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4.03 Authority Relative to this Agreement. Each of Merger Sub and Parent has the
corporate power and authority necessary to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Transactions. The execution and delivery by each of
Merger Sub and Parent of this Agreement and the consummation by each of Merger Sub and Parent of
the Transactions have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Merger Sub or Parent are necessary to authorize their
execution and delivery of this Agreement or to consummate the Transactions (other than the filing
of appropriate merger documents as required by the DGCL). This Agreement has been duly and validly
executed and delivered by each of Merger Sub and Parent, and, assuming the due authorization,
execution and delivery by the Company, constitutes the legal, valid and binding obligations of each
of Merger Sub and Parent, enforceable against them in accordance with its terms (except to the
extent its enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting the enforcement of creditors rights generally and by general
equitable principles).
4.04 No Conflict; Required Filings and Consents.
(a) The execution and delivery by each of Merger Sub and Parent of this Agreement do not, and
the performance by each of Merger Sub and Parent of this Agreement and the consummation by each of
Merger Sub and Parent of the Transactions will not, (i) conflict with or violate the certificate of
incorporation or bylaws (or equivalent organizational documents) of Parent, (ii) conflict with or
violate the certificate of incorporation or bylaws (or equivalent organizational documents) of any
subsidiary of Parent (including Merger Sub), (iii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.04(b) have been obtained and all
filings and obligations described in Section 4.04(b) have been made or fulfilled, conflict
with or violate any Law applicable to Parent or any of its subsidiaries or by which any property or
asset of Parent or any of its subsidiaries is bound or affected, (iv) except as set forth in
Section 4.04(a) of the Parent Disclosure Schedule, conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default under, or give rise to any
right of termination, acceleration or cancellation of, or to Merger Subs or Parents Knowledge,
result in the creation or imposition of a Lien on any property or asset of the Company pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation, except, with respect to clauses (ii), (iii) and (iv) of this
Section 4.04(a), to the extent any such conflicts, violations, breaches, defaults, or other
occurrences would not have a Material Adverse Effect.
(b) The execution and delivery by each of Merger Sub and Parent of this Agreement do not, and
the performance by each of Merger Sub and Parent of this Agreement and the consummation by each of
Merger Sub and Parent of the Transactions will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, except (i) applicable
requirements, if any, of the HSR Act, the Exchange Act, the Securities Act, and the rules and
regulations thereunder and (ii) the filing and recordation of appropriate merger documents as
required by the DGCL and the business organization Laws of the jurisdictions where Merger Sub and
Parent are qualified to do business as foreign corporations.
27
4.05 Brokers. Except as set forth in Section 4.05 of the Parent Disclosure
Schedule, no broker, finder, financial adviser or investment banker is entitled to any brokerage,
finders or other fee or commission in connection with the Transactions based upon arrangements
made by, or on behalf of, Parent or any of its subsidiaries.
4.06 Litigation. There is no Action pending or, to Merger Subs or Parents
Knowledge, threatened against Parent or any of its subsidiaries, except for Actions that, if
determined adversely to Parent or any of its subsidiaries, would not reasonably be expected to have
a Material Adverse Effect.
4.07 Information to be Supplied. None of the information to be supplied by Parent or
Merger Sub to the Company for inclusion in the Proxy Statement or the other Company Disclosure
Documents, or any amendment or supplement thereto, will, at the time they are filed with the SEC
and they are first mailed to stockholders of the Company and at the time of the Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
4.08 Stock Ownership. Neither Parent nor Merger Sub is, nor at any time during the
last three years has been, an interested stockholder of the Company, as defined by Section 203 of
the DGCL.
4.09 Financing. Parent has delivered to the Company true, correct and complete copies
of (a) commitment letters (the Debt Commitment Letters) from Fifth Third Bank and
Falcon Strategic Partners III, LP (collectively, the Lenders), dated as
of the date hereof, pursuant to which the Lenders have committed, subject to the terms and
conditions contained therein, to provide debt financing in the aggregate amount set forth therein
for the purpose of consummating the Transactions and (b) a commitment letter (the Equity
Commitment Letter, and together with the Debt Commitment Letters, the Commitment
Letters) from H.I.G. Bayside Debt & LBO Fund II, L.P. (the Investor), dated
as of the date hereof, pursuant to which the Investor has committed, subject to the terms and
conditions contained therein, to provide equity financing in the aggregate amount set forth therein
for the purpose of consummating the Transactions. As of the date hereof, the Commitment Letters
have not been amended or modified and the commitments set forth in the Commitment Letters have not
been withdrawn or rescinded in any respect. The Commitment Letters, in the form so delivered to
the Company on the date hereof, are, as of the date hereof, in full force and effect and each
constitutes a legal, valid and binding obligation of the parties thereto. The aggregate proceeds
contemplated by the Commitment Letters will be sufficient for Merger Sub to pay the aggregate
Merger Consideration and other amounts payable by it at the Closing in connection with the
Transactions. Except as specifically set forth in the applicable Commitment Letter, (a) there are
no conditions precedent or other contingencies to the obligations of (i) the Investor to fund the
equity financing contemplated by the Equity Commitment Letter and (ii) each Lender to fund the debt
financing contemplated by the applicable Debt Commitment Letter and (b) there are no contingencies
pursuant to any contract, agreement or understanding relating to the Transactions
to which Parent or Merger Sub is a party that would permit either the Investor or the Lenders
to reduce the total amount of the financing contemplated
28
by the Commitment Letters or impose any
additional condition precedent or contingency to the availability of the financing contemplated by
the Commitment Letters. Assuming the accuracy of the Companys representations and warranties set
forth in Article 3, as of the date hereof, no event has occurred that, with or without
notice, lapse of time or both, would constitute a default or breach on the part of Parent or Merger
Sub under any term or condition of the Commitment Letters. Parent is not aware of any fact,
occurrence or condition that would reasonably be expected to make any of the assumptions,
statements, representations or warranties therein inaccurate in any material respect or that would
reasonably be expected to cause the commitments provided in the Commitment Letters to be terminated
or ineffective or any of the conditions contained therein not to be met. Assuming the accuracy of
the Companys representations and warranties set forth in Article 3, as of the date hereof,
Parent has no Knowledge of any event that would be reasonably likely to cause it or Merger Sub to
be unable to satisfy on a timely basis any term or condition of closing to be satisfied by it
contained in the Commitment Letters. Parent and Merger Sub have paid any and all commitment and
other fees that have been incurred and are due and payable on or prior to the date hereof in
connection with the Commitment Letters. The Limited Guarantee constitutes the legal, valid and
binding obligation of the Investor, enforceable against it in accordance with its terms (except to
the extent its enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting the enforcement of creditors rights generally and by general
equitable principles).
4.10 Solvency. Parent and Merger Sub are not entering into the Transactions with the
intent to hinder, delay or defraud either present or future creditors of the Company.
ARTICLE 5
COVENANTS
5.01 Interim Operations. Except as otherwise expressly contemplated by this Agreement
or as set forth in Section 5.01 of the Company Disclosure Schedule or as agreed to in
writing by Parent (which shall not be unreasonably withheld or delayed, other than with respect to
subsections 5.01(c), 5.01(d), 5.01(g), and 5.01(h), in which case
such consent shall be given in Parents sole discretion), the Company covenants and agrees that
during the period from the date of this Agreement to the Effective Time (or until termination of
this Agreement in accordance with Article 7 hereof):
(a) the business and operations of the Company and the Subsidiaries shall be conducted in the
ordinary course of business consistent with past practice;
(b) the Company shall, and shall cause each Subsidiary to, (i) maintain its existence in good
standing under applicable Law, and (ii) use commercially reasonable efforts to (A) preserve intact
its assets, properties, contracts or other legally binding understandings, licenses and business
organizations, (B) keep available the services of its current officers and key employees and (C)
preserve the current relationships of the Company and the Subsidiaries with
payors, customers, suppliers, distributors, lessors, licensors, licensees, creditors,
employees, contractors and other Persons with which the Company or any Subsidiary has business
relations;
(c) the Company shall not (i) authorize for issuance, issue, deliver, propose, sell or agree
or commit to issue, sell or deliver (whether through the issuance or granting of options,
29
commitments, subscriptions, rights to purchase or otherwise), pledge or otherwise encumber any
shares of its capital stock or the capital stock of any Subsidiary, any other securities or any
securities convertible into, or any rights, warrants or options to acquire, any such shares,
securities or convertible securities or any other securities or equity equivalents (including,
without limitation, stock appreciation rights or phantom interests), except for issuances of Common
Stock upon the exercise of Options or Warrants outstanding as of the date hereof, (ii) repurchase,
redeem or otherwise acquire, or permit any Subsidiary to repurchase, redeem or otherwise acquire,
any shares of capital stock or other equity interests of the Company or any Subsidiary (including,
without limitation, securities exchangeable for, or options, warrants, calls, commitments or rights
of any kind to acquire, capital stock or other equity interests of the Company or any Subsidiary),
(iii) sell, transfer or pledge, or agree to sell, transfer or pledge, any equity interest owned by
it in any Subsidiary, (iv) amend or otherwise change its certificate of incorporation or bylaws or
permit any Subsidiary to amend its certificate of incorporation, bylaws or equivalent
organizational documents or (v) adjust, split, combine or reclassify any shares of its capital
stock, or permit any Subsidiary to adjust, split, combine or reclassify any shares of its capital
stock, except in the case of (ii) for purchases, redemptions or other acquisitions of capital stock
or other equity interest required by the terms of the applicable Stock Plan;
(d) the Company shall not, and shall not permit any Subsidiary to (i) declare, set aside,
establish a record date for, or pay any dividends on (whether in cash, stock or other property), or
make any other distributions in respect of, any of its capital stock (except for dividends paid by
direct or indirect wholly owned Subsidiaries to the Company), (ii) acquire or agree to acquire,
including, without limitation, by merging or consolidating with, or purchasing the assets or
capital stock or other equity interests of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division thereof, or (iii)
authorize or make any monthly capital expenditures in excess of $100,000 in the aggregate (other
than pursuant to commitments prior to the date hereof);
(e) the Company shall not, and shall not permit any Subsidiary to, except as expressly
contemplated by this Agreement (including, without limitation, Section 2.03 hereof) (i)
increase or agree to increase in any manner the compensation or benefits of, or pay any bonus to,
any current or former director, officer or employee except (A) for increases and bonuses expressly
contemplated by or required under existing employment agreements or bonus plans, and (B) for
increases in compensation to non-director and non-officer employees in the ordinary course of
business consistent with past practice, (ii) become obligated under any Benefit Plan that was not
in existence on the date hereof or amend, modify or terminate any Benefit Plan or other benefit or
compensation plan, program, agreement or arrangement or any agreement, arrangement, plan or policy
for the benefit of any current or former director, officer or employee in existence on the date
hereof, excluding for this purpose any amendment or modification as may be necessary to comply
with, or to avoid the imposition of penalties or excise taxes to the Company, any Subsidiary, or
any Benefit Plan participant, under applicable Law, (iii) hire any
new employees other than non-officer employees in the ordinary course of business consistent
with past practice, or (iv) terminate any officer or key employee of the Company or any Subsidiary
other than for good reason or for reasonable cause or (v) except as may be required to comply with
applicable Law, pay any benefit not required by any plan or arrangement as in effect as of the date
hereof (including, without limitation, securities exchangeable for, or options,
30
warrants, calls,
commitments or rights of any kind to acquire, capital stock or other equity interests of the
Company or any Subsidiary);
(f) the Company shall not, and shall not permit any Subsidiary to, sell, lease, license,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose of, or agree to sell,
lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of
(including through any sale-leaseback or similar transaction), any of its properties or assets
other than (i) pursuant to existing contracts and commitments, (ii) properties or assets (or
portions of properties or assets) not material to the operation of the business of the Company
and/or any Subsidiary with a fair market value less than $50,000, (iii) inventory in the ordinary
course of business consistent with past practice, (iv) licenses granted by the Company in the
ordinary course of business to customers for such customers use of the Companys products and
services, and (v) Permitted Liens;
(g) the Company shall not, and shall not permit any Subsidiary to, (i) incur, assume or
pre-pay any indebtedness for borrowed money or enter into any agreement to incur, assume or pre-pay
any indebtedness for borrowed money, or guarantee, or agree to guarantee, any such indebtedness or
obligation of another Person, or issue or sell, or agree to issue or sell, any debt securities or
options, warrants or calls or rights to acquire any debt securities of the Company or any
Subsidiary, guarantee any debt securities of others, enter into any keep well or other agreement
to maintain any financial statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, (ii) make or forgive any loans, advances or
capital contributions to, guarantees for the benefit of, or investments in, any Person, other than
loans between or among the Company and any wholly owned Subsidiary and cash advances to the
Companys or any Subsidiarys employees for reimbursable travel and other business expenses
incurred in the ordinary course of business consistent with past practice or (iii) assume,
guarantee or otherwise become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person, except for the obligations of the Subsidiaries permitted
under this Agreement;
(h) the Company shall not, and shall not permit any Subsidiary to, adopt or put into effect a
plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any Subsidiary (other than any
transaction specifically contemplated by this Agreement or as permitted by Section 5.09);
(i) the Company shall not, and shall not permit any Subsidiary to, (i) enter into, or
materially amend, modify, supplement or terminate any Material Contract or Lease, (ii) enter into,
or amend, modify, supplement or terminate any contract that if so entered into, modified, amended
or terminated could be reasonably likely to (A) have a Company Material Adverse Effect, (B) impair
in any material respect the ability of the Company to perform its obligations under this Agreement
or (C) prevent or materially delay the consummation of the Transactions,
or (iii) waive, release, grant, assign, transfer or fail to enforce any of its material rights
or claims (whether such rights or claims arise under a Material Contract or otherwise);
(j) the Company shall, and shall cause the Subsidiaries to, (i) comply in all material
respects with their obligations under the Material Contracts as such obligations become
31
due, (ii)
maintain insurance covering risks of such types and in such amounts as are consistent with the
Companys past practices and (iii) use commercially reasonable efforts not to permit any insurance
policy naming it as beneficiary or loss payable payee to be canceled or terminated;
(k) the Company shall not, and shall not permit any Subsidiary to, (i) pay, discharge, settle
or satisfy any liabilities in excess of $100,000 (individually or in the aggregate), other than the
payment, discharge or satisfaction of liabilities in the ordinary course of business consistent
with past practice, as required by any applicable Law or as required by the terms of any contract
of the Company or the Subsidiaries, (ii) engage in any transaction with, or enter into any
agreement, arrangement or understanding with, any affiliate of the Company or other Person covered
by Item 404 of Regulation S-K promulgated under the Exchange Act that would be required to be
disclosed under such Item 404, (iii) compromise or settle any Action directly relating to or
affecting the Company or the Subsidiaries having a value or in an amount in excess of $250,000,
(iv) effectuate a plant closing or mass layoff, as those terms are defined in the Worker
Adjustment and Retraining Notification Act (WARN), affecting in whole or in part any site of
employment, facility, operating unit or employee of the Company or any Subsidiary, or (v) abandon
or allow to lapse or expire any registration or application for material IP Rights;
(l) the Company shall not, and shall not permit any Subsidiary to, (i) change any of the
accounting policies, practices or procedures (including tax accounting policies, practices and
procedures) used by the Company or any Subsidiary as of the date hereof, except as may be required
as a result of a change in applicable Law or in GAAP, (ii) revalue in any material manner any of
its assets (including, without limitation, writing down or writing off any notes or accounts
receivable in any manner), except as required by GAAP or (iii) make or change any Tax election,
make or change any method of accounting with respect to Taxes except as may be required as a result
of applicable Law, settle or compromise any Tax liability in excess of $250,000 (individually or in
the aggregate) or file any amended Tax Return that would increase the Tax liability of the Company
or any Subsidiary after the Effective Time; and
(m) the Company shall not, and shall not permit any Subsidiary to, agree or commit to do any
of the foregoing.
Notwithstanding anything to the contrary set forth herein, it is understood and agreed that
none of Parent, Merger Sub or their affiliates have the right to control or direct the Companys
operations prior to the Effective Time. Prior to the Effective Time, the Company shall exercise,
consistent with the terms of this Agreement, complete control and supervision over its operations.
5.02 Stockholders Meeting.
(a) The Company, acting through the Company Board, shall, in accordance with applicable Law
and its certificate of incorporation and bylaws, duly call, give notice of, convene
and hold a special meeting of its stockholders (the Stockholders Meeting) as soon as
reasonably practicable following the clearance by the SEC of the Proxy Statement, for the purpose
of considering and voting upon the approval and adoption of this Agreement, the Merger and such
other matters as may be necessary to effectuate the Transactions; provided, however, that nothing
herein shall prevent the Company from postponing or adjourning the Stockholders Meeting if (i)
there are an insufficient number of shares of Common Stock represented at the Stockholders
32
Meeting
to establish a quorum to conduct business or (ii) subject to Sections 5.02(c) and
5.09(b), the Company is required to postpone or adjourn the Stockholders Meeting by
applicable Law (including any necessary supplements or amendments to the Proxy Statement), Order or
a request from the SEC or its staff.
(b) The Company shall establish a record date for purposes of determining stockholders
entitled to notice of and vote at the Stockholders Meeting (the Record Date) that is as
close as reasonably practicable to the date on which the Proxy Statement is mailed to the Companys
stockholders. Once the Company has established the Record Date, the Company shall not change such
Record Date or establish a different record date for the Stockholders Meeting without the prior
written consent of Parent, unless required to do so by applicable Law. In the event that the
Stockholders Meeting as originally called is for any reason adjourned or the date of the
Stockholders Meeting is postponed or otherwise delayed, the Company agrees that it shall use its
best efforts to implement such adjournment or postponement or other delay in such a way that the
Company does not establish a new Record Date for the Stockholders Meeting as so adjourned,
postponed or delayed, except as required by applicable Law.
(c) The Company Board shall (i) make the Board Recommendation, (ii) include in the Proxy
Statement the Board Recommendation, and (iii) not withdraw or modify the Board Recommendation;
provided, however, notwithstanding anything to the contrary in this Agreement, prior to the
Stockholders Meeting the Company Board may withdraw, change or modify the Board Recommendation only
(x) in accordance with Section 5.09(b) or (y) in response to an Intervening Event (it being
agreed and understood that the Company Board may only withdraw, change, or modify the Board
Recommendation in response to an Intervening Event if the Company Board determines in good faith
after consultation with its outside legal counsel that, in light of such Intervening Event, the
withdrawal or modification of the Board Recommendation is required in order for the Company Board
to comply with its fiduciary obligations to the Companys stockholders under applicable Law).
Notwithstanding anything to the contrary contained herein, the Company Board shall not be entitled
to exercise its right to withdraw, change or modify the Board Recommendation in response to an
Intervening Event unless the Company promptly notifies Parent, in writing, at least three (3)
business days before taking such action, of its intention to do so, together with a description of
the Intervening Event, and, during such three (3) business day period, if requested by Parent, the
Company shall engage in good faith negotiations with Parent to amend this Agreement in a manner
such that such withdraw, change or modification of the Board Recommendation would no longer
reasonably be required by the fiduciary duties of the Company Board under applicable Law.
(d) As soon as reasonably practicable following the execution of this Agreement and in
connection with the Stockholders Meeting, the Company shall (i) promptly (but in any event within
twenty (20) days after the date hereof) prepare and file with the SEC the Proxy
Statement, use its commercially reasonable efforts to have cleared by the SEC and thereafter
mail to its stockholders as promptly as practicable (but in any event within ten (10) days after
clearance by the SEC of the Proxy Statement or a determination by the SEC not to review the Proxy
Statement) the Proxy Statement and all other proxy materials required in connection with such
meeting and, if necessary to comply with applicable securities Laws, after the Proxy Statement
shall have been so mailed, promptly circulate amended, supplemental or supplemented
33
proxy material,
and, if required in connection therewith, re-solicit proxies, (ii) notify Merger Sub and Parent of
the receipt of any comments of the SEC with respect to the Proxy Statement and of any requests by
the SEC for any amendment or supplement thereto or for additional information and shall promptly
provide to Merger Sub and Parent copies of all correspondence between the Company or any
representative of the Company and the SEC, (iii) give Merger Sub and Parent and their counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC and give Merger Sub
and Parent and their counsel the opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies to comments prior to
their being filed with, or sent to, the SEC, and (iv) subject to Section 5.02(c) and the
right of the Company to terminate this Agreement as provided in Section 5.09(b), use its
best efforts to obtain the necessary approvals by its stockholders of this Agreement and the
Merger. Parent and Merger Sub will use commercially reasonable efforts to deliver to the Company
all readily available information reasonably requested by the Company for inclusion in the Proxy
Statement. The Proxy Statement shall include all material disclosure relating to the Financial
Advisor (including the amount of fees and other considerations the Financial Advisor will receive
upon consummation of the Merger, and the conditions for the payment of such fees and other
considerations), the opinion referred to in Section 3.21 and the basis for rendering such
opinion. The Company may, if it has complied with the provisions of Section 5.09 and this
Section 5.02, as applicable, and it receives a bona fide Acquisition Proposal (as defined
below) that it reasonably expects would result in a Superior Proposal (as defined in Section
5.09(g)) or reasonably believes that an Intervening Event may have occurred, delay the mailing
of the Proxy Statement or the holding of the Stockholders Meeting, in each case, for such time (but
in no event more than ten (10) business days) as is necessary for the Company Board (or any
committee thereof) to consider such Acquisition Proposal or Intervening Event and to determine the
effect, if any, on the Board Recommendation.
5.03 Filings and Consents. Subject to the terms and conditions of this Agreement,
each of the parties hereto (i) shall use its commercially reasonable efforts to cooperate with one
another in determining which filings are required to be made by each party prior to the Effective
Time with, and which consents, approvals, permits or authorizations are required to be obtained by
each party prior to the Effective Time from, Governmental Authorities or other third parties in
connection with the execution and delivery of this Agreement and the consummation of the
Transactions and (ii) shall use its commercially reasonable efforts to assist the other parties
hereto in timely making all such filings and timely seeking all such consents, approvals, permits,
authorizations and waivers required to be made and obtained by the other party. Without limiting
the foregoing, each of the parties hereto shall (and shall use its commercially reasonable efforts
to cause their affiliates, directors, officers, employees, agents, attorneys, accountants and
representatives to) consult and fully cooperate with and provide assistance to each other in
seeking early termination of any waiting period under the HSR Act or any foreign merger control or
competition Laws, if applicable, and use commercially reasonable efforts to avoid the entry of, or
to have vacated or
terminated, any Order that would restrain, prevent or delay consummation of the Merger.
Subject to the provisions of this Section 5.03, none of Parent, Merger Sub or the Company
shall knowingly impede or delay the termination or expiration of any waiting period under the HSR
Act or enter into any agreement not to consummate the Transactions with the Federal Trade
Commission, the Antitrust Division of the United States Department of Justice or any similar
foreign agency responsible for overseeing merger control or competition Laws, except with the prior
written consent of the other parties hereto, which
34
consent shall not be unreasonably withheld or
delayed. Prior to making any application to or filing with any Governmental Authority in
connection with this Agreement, each party shall provide the other party with drafts thereof
(excluding any confidential information included therein) and afford the other party a reasonable
opportunity to comment on such drafts. Each of the Company and Parent shall bear one half of the
fees of any required filing to be made with any Governmental Authorities in connection with the
Transactions.
5.04 Access to Information. From the date of this Agreement until the earlier of the
Effective Time or the date this Agreement is properly terminated in accordance with Article
7, and subject to the requirements of any Law, including any anti-trust Law, the Company will,
and will cause each Subsidiary and its and their affiliates, and each of their respective officers,
directors, employees, agents, counsel, accountants, investment bankers, financial advisors and
representatives (collectively, the Company Representatives) to, give Merger Sub and
Parent and their respective officers, directors, employees, agents, counsel, accountants,
investment bankers, financial advisors, representatives, consultants and financing sources
(collectively, the Parent Representatives) reasonable access, upon reasonable notice and
during the Companys normal business hours, to the offices and other facilities, to the senior
officers and other Company Representatives, and to the payors, vendors, and books and records of
the Company and each Subsidiary and will cause the Company Representatives and the Subsidiaries to
furnish or make available to Parent, Merger Sub and the Parent Representatives such financial and
operating data and such other information with respect to the business and operations of the
Company or any Subsidiary as Parent, Merger Sub or the Parent Representatives may from time to time
reasonably request, provided that such investigation shall not unreasonably disrupt the Companys
business. Notwithstanding the foregoing, the Company may withhold (i) any document or information
that is subject to the terms of a confidentiality agreement with a third party, (ii) information
that, if disclosed, would violate an attorney-client or other privilege or might constitute a
waiver of rights as to attorney work product or attorney-client privilege, or (iii) information,
the disclosure of which is prohibited by Law, such as portions of documents or information relating
to pricing or other matters that are highly sensitive if the exchange of such documents (or
portions thereof) or information, as determined by the Companys counsel, might reasonably result
in antitrust compliance questions for such party (or any of its affiliates). If any material is
withheld by the Company pursuant to the preceding sentence, the Company shall inform Parent and
Merger Sub as to the general nature of what is being withheld and the Company and Parent shall
cooperate in good faith to design and implement alternative procedures to enable Parent to evaluate
any such information without waiving an applicable privilege or causing a violation or default
under any contract or applicable Law or giving any third party a right to terminate or accelerate
the rights under any contract. Unless otherwise required by Law, each of Parent and Merger Sub
will, and will cause the Parent Representatives to, hold any such information in confidence in
accordance with the terms of the
Confidentiality Agreement (as defined below). Except as otherwise agreed to by the Company,
and notwithstanding termination of this Agreement, the terms and provisions of the Confidentiality
Agreement, dated as of April 13, 2009 (the Confidentiality Agreement), between H.I.G.
Capital Management, Inc. and Raymond James & Associates, Inc., as advisor to, and on behalf of, the
Company, shall apply to all information furnished to any Parent Representative by the Company, any
Subsidiary or any Company Representative hereunder or thereunder.
35
5.05 Notification of Certain Matters. Each of the parties hereto shall, with respect
to such party, promptly notify the others in writing of (a) any Material Adverse Effect, (b) any
material claims, actions, proceedings or governmental investigations commenced or, to its
Knowledge, threatened, involving or affecting the Company or any Subsidiary or any of their
property or assets, (c) any representation or warranty made by such party contained in this
Agreement becoming untrue or inaccurate in any material respect and (d) any failure of the Company,
Merger Sub or Parent, as the case may be, to comply with or satisfy, in any material respect, any
covenant, condition or agreement to be complied with or satisfied by it hereunder. Notwithstanding
anything in this Agreement to the contrary, no such notification or investigation by any party
shall affect the representations, warranties or covenants of any party or the conditions to the
obligations of any party hereunder, nor shall it limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
5.06 Public Announcements. Each of the parties hereto agrees that, promptly following
the execution of this Agreement, the Company shall (a) issue a press release in a form mutually
agreed to by Parent and the Company announcing the execution of this Agreement and the Transactions
and (b) file a current report with the SEC on Form 8-K attaching such press release and a copy of
this Agreement as exhibits. Thereafter, the parties hereto agree to consult promptly with each
other prior to issuing any press release or otherwise making any public statement with respect to
the Merger and the other Transactions, agree to provide to each other for review a copy of any such
press release or statement, and shall not issue any such press release or make any such public
statement prior to such consultation and review, unless required by applicable Law.
5.07 Indemnification; Directors and Officers Insurance. All rights to indemnification, advancement of expenses and exculpation from liabilities
for acts or omissions occurring at or prior to the Effective Time existing in favor of the current
or former directors or officers of the Company and the Subsidiaries (collectively, the
Indemnified Parties) as provided in their respective certificates of incorporation or
bylaws (or comparable organizational documents) and any indemnification or other agreements of the
Company or any Subsidiary as in effect on the date of this Agreement (copies of which have been
furnished or made available to Parent and Merger Sub prior to the date hereof) shall be assumed by
the Surviving Corporation in the Merger, without further action, at the Effective Time, and shall
survive the Merger and shall continue in full force and effect without amendment, repeal or other
modification for a period of six (6) years following the Closing Date, and Parent shall cause the
Surviving Corporation to comply with and honor the
foregoing obligations; provided that such obligations shall be subject to any limitation
imposed from time to time under applicable Law. From the Effective Time through the sixth
(6th) anniversary of the date on which the Effective Time occurs, the certificate of
incorporation and bylaws of the Surviving Corporation shall contain, and Parent shall cause the
certificate of incorporation and bylaws of the Surviving Corporation to contain, provisions no less
favorable with respect to indemnification, advancement of expenses and exculpation of present and
former directors and officers of the Company and the Subsidiaries for acts or omissions occurring
at or prior to the Effective Time than are presently set forth in the certificate of incorporation
and bylaws of the Company in effect on the date of this Agreement, and such provisions shall not be
amended, repealed, or otherwise modified in any manner that would reasonably be expected to
adversely affect the rights thereunder of any Indemnified Party.
36
(b) In the event that the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and other assets to any Person, then, and in each such case, as
a condition to such consolidation, merger, transfer or conveyance, Parent shall cause proper
provision to be made so that the successors and assigns of the Surviving Corporation shall
expressly assume the obligations set forth in this Section 5.07.
(c) The Company may purchase, prior to the Effective Time, and if the Company does not so
purchase, Parent shall or shall cause the Surviving Corporation to purchase promptly after the
Effective Time, a six (6)-year tail prepaid policy on the Companys directors and officers
liability insurance policy covering each person currently covered by the Companys directors and
officers liability insurance policy, on terms with respect to such coverage and amounts no less
favorable than those of such policy in effect on the date hereof. Following the Effective Time,
Parent shall or shall cause the Surviving Corporation to maintain such tail policy in full force
and effect and to continue to honor its obligations thereunder. If the Company, Parent and the
Surviving Corporation for any reason fail to obtain such tail policy as of or promptly after, as
applicable, the Effective Time, then for six (6) years after the Effective Time, the Surviving
Corporation shall maintain the Companys current officers and directors liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time covering each such
Indemnified Party currently covered by the Companys officers and directors liability insurance
policy on terms with respect to coverage and amount no less favorable than those of such policy in
effect on the date hereof; provided that in satisfying its obligation under this Section
5.07(c), the Surviving Corporation shall not be obligated to pay premiums in excess of three
hundred percent (300%) of the current annual premium paid by the Company for such existing
insurance, which amount is set forth in Section 5.07(c) of the Company Disclosure Schedule;
provided further that if such insurance cannot be so maintained or obtained at such cost, the
Surviving Corporation shall maintain or obtain as much of such insurance as can be so maintained or
obtained at an annual cost equal to three hundred percent (300%) of the current annual premium paid
by the Company for such existing insurance.
(d) This Section 5.07 shall survive the consummation of the Merger and is intended to
be for the benefit of, and shall be enforceable by, the Indemnified Parties referred to herein,
their heirs, legal representatives, successors, assigns and personal representatives and shall be
binding on the Surviving Corporation and its successors and assigns. The provisions of
this Section 5.07 are in addition to, and not in substitution for, any other rights to
indemnification that the Indemnified Parties, their heirs and personal representatives may have by
contract or otherwise.
5.08 Further Assurances; Commercially Reasonable Efforts. Except as otherwise
provided in this Agreement, prior to the Effective Time, the parties hereto shall use their
commercially reasonable efforts to take, or cause to be taken, all such actions as may be necessary
or appropriate in order to effectuate, as expeditiously as practicable, the Merger and the other
Transactions on the terms and subject to the conditions set forth in this Agreement.
5.09 No Solicitation. From and after the date hereof until the earlier of the Effective Time or the termination
of this Agreement pursuant to Article 7, the Company, the Subsidiaries
37
and their affiliates
shall not, and shall cause the Company Representatives not to, directly or indirectly, (i) solicit,
initiate or encourage (including, without limitation, by way of furnishing non-public information
or assistance), or take any other action to knowingly facilitate, any inquiry in connection with or
the making of any proposal from any Person that constitutes, or may reasonably be expected to lead
to, an Acquisition Proposal (as defined in Section 5.09(f)), (ii) enter into, maintain,
participate in or continue any discussion or negotiation with any Person (other than Merger Sub,
Parent or any of the Parent Representatives, as applicable) regarding an Acquisition Proposal, or
furnish to any Person (other than Merger Sub, Parent or any of the Parent Representatives, as
applicable) any information or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person (other than Merger Sub, Parent
or any of the Parent Representatives, as applicable) to make or effect an Acquisition Proposal,
(iii) grant a waiver under Section 203 of the DGCL or enter into any agreement, arrangement or
understanding with respect to, or otherwise endorse, any Acquisition Proposal, or (iv) resolve to
do any of the foregoing; provided, however, that nothing contained in this Section 5.09
shall prohibit the Company Board (or any Authorized Committee), prior to approval and adoption of
this Agreement by the stockholders of the Company at the Stockholders Meeting, from furnishing
information to (provided that the Company shall promptly make available to Parent and Merger Sub
any information not previously delivered or made available to Parent and Merger Sub concerning the
Company or the Subsidiaries that is made available to any Person given such access), or engaging in
discussions or negotiations with, any Person that makes an Acquisition Proposal not made in breach
of this Section 5.09 if (A) the Company Board (or any Authorized Committee) determines in
good faith after consultation with its independent outside legal counsel, that such action is
necessary for the Company Board to comply with its fiduciary duties to the Companys stockholders
under applicable Law, (B) the Company Board (or any Authorized Committee) determines in good faith
after consultation with its independent outside legal counsel and financial advisor that the
Acquisition Proposal constitutes or would reasonably be expected to lead to a Superior Proposal (as
defined in Section 5.09(g)), and (C) prior to furnishing such information to, or engaging
in discussions or negotiations with, such Person, the Company receives from such Person an executed
confidentiality agreement with terms not less favorable to the Company than those contained in the
Confidentiality Agreement (except for such changes necessary to allow the Company to comply with
this Agreement including entering into a confidentiality agreement with a standstill
provision that allows the Companys interaction with such Person in accordance with this
Section 5.09). The Company agrees that in the event any Company Representative takes any
action that, if taken by the Company, would constitute a breach of this Section 5.09(a),
then the Company shall be deemed to be in breach of this Section 5.09(a).
(b) From and after the date hereof until the earlier of the Effective Time and the termination
of this Agreement pursuant to Article 7, if the Company Board (or any Authorized Committee)
is entitled to furnish information to, or engage in discussions or negotiations with, any Person
pursuant to Section 5.09(a), the Company Board (or any Authorized Committee) may, prior to
the approval of this Agreement by the stockholders of the Company at the Stockholders Meeting,
withdraw, change or modify the Board Recommendation and terminate this Agreement if (A) such
Acquisition Proposal constitutes a Superior Proposal, (B) the Company Board (or any Authorized
Committee) shall have determined in good faith after consultation with outside legal counsel, that
such action is necessary for the Company Board to comply with its fiduciary duties to the Companys
stockholders under applicable Law, and (C)
38
the Notice Period provided in Section 5.09(c)
shall have expired. If the Company terminates this Agreement pursuant to this Section
5.09(b), the Company must pay Parent the Break-Up Fee pursuant to Section 8.01(c) at
the time of such termination.
(c) The Company (i) will promptly notify Parent orally and in writing of the receipt of any
Acquisition Proposal or any inquiry regarding the making of an Acquisition Proposal including any
request for information or for access to the properties, books or records of the Company or the
Subsidiaries, the terms and conditions of such request, Acquisition Proposal or inquiry and the
identity of the Person making such request, Acquisition Proposal or inquiry and (ii) will keep
Parent reasonably informed of the status and details (including prompt notification of any proposed
amendments) of any such request, Acquisition Proposal or inquiry. The Company shall promptly (and
in any event, within 24 hours) inform Parent of any change in the price, structure or form of
consideration or other terms and conditions of such Acquisition Proposal. Promptly (and in any
event, within 24 hours) upon determination by the Company Board that an Acquisition Proposal
constitutes a Superior Proposal, the Company shall notify Parent that the Company Board has
received a Superior Proposal, specifying in detail the terms and conditions of such Superior
Proposal and the identity of the Person making such Superior Proposal. The Company agrees, during
the three (3) business day period following Parents receipt of a notice of a Superior Proposal (or
any material amendment or modification thereto (it being agreed and understood that any change in
price shall constitute a material amendment or modification) in which case the Company shall be
required to deliver a new written notice to Parent and to comply with this Section 5.09(c)
with respect to such new written notice) (the Notice Period), to negotiate in good faith
with Parent to allow Parent to match or better such Superior Proposal.
(d) Nothing contained in this Agreement shall prevent the Company Board (or any Authorized
Committee) from taking, and disclosing to the Companys stockholders, a position contemplated by
Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act with regard to any tender offer;
provided that any such disclosure relating to a Acquisition Proposal (other than a stop, look and
listen communication pursuant to Rule 14d-9(f) under the Exchange Act or similar communication)
shall be deemed to be a Company Adverse
Recommendation Change unless the Company Board reaffirms the Board Recommendation in such
disclosure.
(e) The Company shall immediately cease, and shall cause its affiliates, the Subsidiaries and
the Company Representatives to cease, any and all existing activities, discussions and negotiations
with any parties (other than Merger Sub, Parent or any of the Purchaser Representatives, as
applicable) conducted heretofore with respect to any Acquisition Proposal.
(f) For purposes of this Agreement, Acquisition Proposal shall mean any offer or
proposal for, or any indication of interest in, (i) any direct or indirect acquisition or purchase
of 15% or more of the total assets of the Company or any Subsidiary, in a single transaction or
series of related transactions, (ii) any direct or indirect acquisition or purchase of 15% or more
of any class of equity securities of the Company or any Subsidiary, in a single transaction or
series of related transactions, (iii) any tender offer or exchange offer (including a self-tender
offer) that if consummated would result in any person beneficially owning 15% or more of any class
of
39
equity securities of the Company or any Subsidiary, (iv) any merger, consolidation, share
exchange, business combination, recapitalization, reclassification or other similar transaction
involving the Company or any Subsidiary, (v) any combination of the foregoing or (vi) an agreement,
proposal or plan to do any of the foregoing, other than the Transactions contemplated by this
Agreement.
(g) For purposes of this Agreement, Superior Proposal shall mean any bona fide,
written Acquisition Proposal (with all percentages included in the definition of Acquisition
Proposal increased to fifty percent (50%)) that (i) the Company Board (or the Special Committee)
has determined in good faith, after consultation with an independent financial advisor and outside
counsel, is more favorable from a financial point of view to the Companys stockholders than the
Merger (including any adjustment to the terms and conditions thereof proposed in writing by Parent
in response to any such Acquisition Proposal), and (ii) is reasonably capable of being consummated
(taking into account all financial, regulatory, legal, stockholder litigation, breakup fee and
expense reimbursement provisions and all other relevant aspects of such proposal).
5.10 Third Party Standstill Agreements. From the date of this Agreement until the
earlier of the termination of this Agreement pursuant to Article 7 or the Effective Time,
the Company shall not release, terminate, amend or modify any material provision of any
confidentiality or standstill agreement to which the Company is a party (other than involving
Parent or its affiliates), unless the Company Board (or any Authorized Committee) determines in
good faith after consultation with its independent outside legal counsel, that such action is
necessary for the Company Board to comply with its fiduciary duties to the Companys stockholders
under applicable Law. During such period, the Company agrees to use commercially reasonable
efforts to enforce, to the fullest extent permitted under applicable Law, the provisions of any
such agreements, including, but not limited to, seeking injunctions to prevent any breaches of such
agreements or to enforce specifically the terms and provisions thereof in a court in the United
States or any state thereof having jurisdiction. To the extent Parent believes that there has been
a breach of any such existing
confidentiality agreement by the counterparty thereto, upon Parents request, the Company
shall use such commercially reasonable efforts to enforce such existing confidentiality agreement.
5.11 SEC Reports. From the date of this Agreement until the earlier of the
termination of this Agreement pursuant to Article 7 or the Effective Time, the Company
shall use commercially reasonable efforts to file on a timely basis all SEC Reports required to be
filed by it with the SEC under the Exchange Act, the Securities Act and the published rules and
regulations of the SEC under either of the foregoing applicable to such SEC Reports.
5.12 Termination of Registration. Each of the parties hereto agrees to cooperate with
the other party in taking, or causing to be taken, all actions necessary to terminate the
registration of the Common Stock under the Exchange Act; provided that such termination shall not
be effective until or after the Effective Time.
5.13 Stockholder Litigation. Each of the parties hereto shall give the others the
reasonable opportunity to participate in the defense of any stockholder litigation against the
Company, Parent or Merger Sub, as applicable, and their directors relating to the Transactions,
40
and
the Company will obtain the prior written consent of Parent prior to settling or satisfying any
such stockholder litigation. The Company will not voluntarily cooperate with any third party who
has sought or may hereafter seek to restrain or prohibit or otherwise oppose the Merger and will
cooperate with Parent to resist any such effort to restrain or prohibit or otherwise oppose the
Merger. Any such participation by Parent shall be at Parents sole cost and expense.
5.14 Special Meeting. Subject to Section 5.02, the Company shall take no
action to call a special meeting of stockholders of the Company without the prior consent of Parent
unless compelled by legal process, except in accordance with this Agreement unless and until this
Agreement has been terminated in accordance with its terms.
5.15 Employee Benefit Matters.
(a) Until twelve (12) months following the Effective Time, the Surviving Corporation will,
with respect to each employee of the Company or any Subsidiary who continues to be employed by the
Surviving Corporation and its subsidiaries (each, a Continuing Employee) maintain the
base salary and non-equity based incentive bonus opportunity of each such Continuing Employee and
will maintain 401(k), health and welfare benefits and severance policies that, in the aggregate,
are no less favorable than such benefits and policies under the Benefit Plans as in effect on the
date hereof (other than modifications to any benefit or compensation plans, programs, agreements or
arrangements in the ordinary course of business consistent with past practice and other than with
respect to any equity-based compensation or benefits). Nothing in this Section 5.15(a)
shall be deemed to prevent the Surviving Corporation or any of its subsidiaries from making any
change required by applicable Law or require the Surviving Corporation or its subsidiaries to
provide equity based compensation or benefits or issue equity of the Surviving Corporation or
Parent or any of their
affiliates on or after the Effective Time, and nothing in this Agreement shall limit the
ability of the Surviving Corporation or any of its affiliates to terminate the employment of any
employee (including any Continuing Employee) at any time and for any or no reason. To the extent
not paid prior to the Effective Time and solely to the extent reflected as a liability in working
capital, the Surviving Corporation shall pay to Continuing Employees their bonuses, if any, in
accordance with the Companys 2009 bonus plan as in effect on the date hereof (which plan is
consistent with bonus plans of the Company for prior years), with such bonuses, if any, to be paid
by the Surviving Corporation in accordance with the terms of such plan.
(b) Following the Closing, the Parent shall make commercially reasonable efforts to provide
that each Continuing Employee shall be given credit for all service credited by the Company or the
Subsidiaries as of the Effective Time under analogous Benefit Plans for purposes of eligibility and
vesting, but not for purposes of benefit accrual, under any health and welfare, vacation or 401(k)
plan in which the Continuing Employees are eligible to participate following the Effective Time,
provided that such service shall be credited for benefit accrual purposes under any such vacation
plan.
(c) This Section 5.15 shall be binding upon and inure solely to the benefit of each of
the parties to this Agreement and nothing in this Section 5.15, expressed or implied, is
intended to confer upon any other Person any rights or remedies of any nature whatsoever under or
by reason of this Section 5.15. Nothing contained in this Section 5.15 shall
create any third
41
party beneficiary rights in any Person, including any employee or former employee
or Continuing Employee (including any dependent thereof) of the Company, any Subsidiary or the
Surviving Corporation, or shall create any right to employment or continued employment for any
specified period of any nature or kind whatsoever. Nothing in this Section 5.15 is
intended to amend any Benefit Plan or interfere with Parents or the Surviving Corporations or any
of their affiliates right from and after the Effective Time to amend or terminate any Benefit
Plans or any other benefit or compensation plan, program, agreement or arrangement at any time
adopted, maintained, sponsored, or contributed to by any of them.
5.16 Transfer Taxes. All stock transfer, real estate transfer, documentary, stamp,
recording and other similar Taxes (including interest, penalties and additions to any such Taxes)
(Transfer Taxes) incurred in connection with the Transactions shall be paid by the
Surviving Corporation.
5.17 Financing Assistance. Prior to the Closing, the Company shall (and the Company
shall cause each Subsidiary to) provide, and shall use its commercially reasonable efforts to cause
the Company Representatives to provide, all cooperation reasonably requested by Parent in
connection with the arrangement of the debt financing referred to in the Debt Commitment Letters
(the Debt Financing), including (a) assisting with the preparation of materials for bank
information memoranda and similar documents required in connection with the Debt Financing;
provided that any such memoranda and similar documents need not be issued by the Company or the
Subsidiaries; provided, further, that, any such memoranda shall contain disclosure and financial
statements with respect to the Company and the Subsidiaries reflecting the Company and the
Subsidiaries as the obligor, (b) executing and delivering customary guarantee, pledge and security
documents and related officer certificates or other documents as may be reasonably
requested by Parent (including certificates of the chief financial officer of the Company and
each Subsidiary with respect to solvency and other customary matters for use in their reports in
any materials relating to the Debt Financing) and otherwise reasonably facilitating the
guaranteeing of obligations and the pledging of collateral, (c) furnishing Parent and its financing
sources with financial and other pertinent information regarding the Company and the Subsidiaries
as may be reasonably requested by Parent or its financing sources, including information related to
the Company and the Subsidiaries required by regulatory authorities including under applicable
know your customer and anti money laundering rules and regulations, including the Patriot Act,
(d) permitting the prospective lenders involved in the Debt Financing to evaluate and appraise the
Companys and the Subsidiaries current assets and liabilities, cash management and accounting
systems, policies and procedures relating thereto for the purpose of establishing collateral
arrangements; provided that, the foregoing notwithstanding, no obligations of the Company or the
Subsidiaries or the Company Representatives under any such agreement, certificate, document or
instrument shall be effective until the Closing, and (e) participating in meetings, presentations,
road shows, due diligence sessions, drafting sessions and sessions with rating agencies. The
provisions of this Section shall not require such cooperation to the extent it would interfere
unreasonably with the business or operations of the Company or any Subsidiary. Neither the Company
nor any Subsidiary shall be required to pay any commitment fee or similar fee or incur any
liability with respect to the financing contemplated by the Commitment Letters prior to the
Closing. Parent shall, promptly upon request by the Company, reimburse the Company for all
out-of-pocket costs incurred by the Company or any Subsidiary in connection with the cooperation
required by this Section. The Company hereby consents to the use of its
42
and the Subsidiaries
logos in connection with the Debt Financing; provided that such logos are used solely in a manner
that is not intended to nor reasonably likely to harm or disparage the Company or any Subsidiary or
the reputation or goodwill of the Company or any Subsidiary.
5.18 Maintenance of Commitments. Not in limitation of its obligations under
Section 5.08, Parent shall use its reasonable best efforts to arrange the financing
contemplated by the Commitment Letters as promptly as practicable on the terms and conditions
described in the Commitment Letters, including using reasonable best efforts to (a) maintain in
effect the Commitment Letters and negotiate definitive agreements with respect thereto on the terms
and conditions contained therein or on other terms not materially less favorable to Parent or
otherwise acceptable to Parent, (b) satisfy on a timely basis all conditions applicable to Parent
and Merger Sub in such definitive agreements and in the Commitment Letters and (c) consummate the
financing contemplated by the Commitment Letters at or prior to the Closing. If all conditions to
the Commitment Letters (other than the availability of funding contemplated by the Equity
Commitment Letter) have been satisfied, Parent shall use its reasonable best efforts to cause the
Persons providing such financing under the Commitment Letters to fund such financing required to
consummate the Merger on the Closing Date (including by taking enforcement action to cause such
Lenders providing such financing to fund such financing). If any portion of such financing becomes
unavailable on the terms and conditions contemplated in the Commitment Letters, Parent shall use
its reasonable best efforts to arrange to obtain alternative financing from alternative sources on
terms substantially similar to those contained in the applicable Commitment Letter, or on terms
substantially similar to those then prevailing in the applicable capital markets (so long as such
terms are not materially less favorable, in the aggregate, to Parent and Merger Sub as the terms
set forth in the applicable Commitment Letter), as promptly as practicable following the
occurrence of such event (the commitment letter evidencing such debt or equity commitments
shall also be referred to herein as a Debt Commitment Letter or Equity Commitment
Letter, as applicable). Notwithstanding the foregoing, Parent shall deliver to the Company a
copy of any proposed amendment, modification, waiver or supplement to a Commitment Letter to the
Company at least three (3) business days prior to the proposed execution of the same. Parent shall
not enter into any amendment, modification, waiver or supplement to a Commitment Letter without the
prior written consent of the Company if such amendment, modification, waiver or supplement (i)
imposes additional conditions precedent or other contingencies to the funding obligations
thereunder, (ii) reduces the amount of the financing committed thereunder to an amount that, when
combined with the amounts committed pursuant to the other Commitment Letters, would be insufficient
to consummate the Transactions or (iii) would reasonably be expected to materially delay or prevent
the Closing Date or to make the funding of such financing materially less likely to occur. Parent
shall keep the Company reasonably apprised of material developments relating to the financings
contemplated by the Commitment Letters. Parent will pay when due all fees due and payable under
the Commitment Letters as and when they become payable.
5.19 Takeover Statutes. Parent, the Company and their respective boards of directors
(or with respect to the Company, the Special Committee, if appropriate) shall (a) take all
reasonable action necessary to ensure that no Takeover Statute is or becomes applicable to this
Agreement or the Transactions and (b) if any Takeover Statute becomes applicable to this Agreement
or the Transactions, take all reasonable action necessary to ensure that the
43
Transactions may be
consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such Takeover Statute on this Agreement or the Transactions.
5.20 Section 16 Matters. Prior to the Effective Time, the Company shall take all
such steps as may reasonably be necessary and permitted to cause the Transactions, including any
dispositions of shares of Common Stock (including derivative securities with respect to such shares
of Common Stock) by each individual who is or will be subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to the Company, to be exempt under Rule 16b-3
promulgated under the Exchange Act.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
6.01 Conditions to the Obligations of Each Party. The respective obligations of the
Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction, at or
before the Effective Time, of each of the following conditions:
(a) Company Stockholder Approval. The Company shall have obtained the Stockholder
Approval at the Stockholders Meeting in accordance with the DGCL, the Companys certificate of
incorporation and its bylaws.
(b) No Orders and Injunctions. Following the date hereof, no Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any Law or Order that is then in
effect and has the legal effect of preventing or prohibiting consummation of the Merger; provided,
however, that each of the parties hereto shall use their commercially reasonable efforts to have
any such Order vacated.
(c) Material Consents. All consents, approvals, permits of, authorizations from,
notifications to and filings with any Governmental Authorities set forth in Section 6.01(c)
to the Company Disclosure Schedule shall have been made, obtained, or effected, as the case may be.
(d) HSR Act. Any waiting period (and any extension thereof) under the HSR Act or
merger control or competition Laws applicable to the consummation of the Merger shall have expired
or terminated.
6.02 Conditions to Obligations of Merger Sub and Parent. The obligations of each of
Merger Sub and Parent to consummate the Merger are subject to the satisfaction, at or before the
Effective Time, of each of the following additional conditions, unless waived by Parent, acting
under the direction of its board of directors, in writing prior to the Effective Time:
(a) Representations and Warranties. (i) The representations and warranties of the
Company set forth in Sections 3.01(a), 3.01(b), 3.03(a), 3.03(b),
3.04 and 3.24 of this Agreement shall be true and correct in all material respects
as of the Closing Date as if made on and as of the Closing Date, other than representations and
warranties that expressly speak only as of a
44
particular date, which shall have been true and
correct as of such particular date, provided that any such representation and warranty shall be
true and correct in all respects where it is by its terms already qualified with respect to
materiality or a Material Adverse Effect; (ii) the representations and warranties set forth in
Section 3.08(b) shall be true and correct in all respects (without disregarding the
Material Adverse Effect qualification therein) as of the date of this Agreement and as of the
Closing Date as if made at and as of the Closing Date; and (iii) other than the representations and
warranties set forth in Sections 3.01(a), 3.01(b), 3.03(a),
3.03(b), 3.04, 3.08(b) and 3.24, the representations and warranties
of the Company in this Agreement shall be true and correct as of the Closing Date as if made on and
as of the Closing Date, other than representations and warranties that expressly speak only as of a
particular date, which shall have been true and correct as of such particular date, except where
the failure of such representations and warranties to be true and correct would not, individually
or in the aggregate, have a Material Adverse Effect (without giving effect to any materiality or
Material Adverse Effect qualification contained therein).
(b) Covenants and Agreements. The Company shall have performed, in all material
respects, all obligations and complied with all agreements and covenants required to be performed
by it or complied with by it under this Agreement at or prior to the Effective Time.
(c) No Material Adverse Effect. Since the date of this Agreement, there shall not
have occurred a Material Adverse Effect to the Company.
(d) Officers Certificate. At the Closing, the Company shall deliver an Officers
Certificate, duly executed by the Companys Chief Executive Officer and Chief Financial Officer and
dated as of the Closing Date, stating that the conditions to Closing set forth in Sections
6.02(a) and (b) above have been satisfied.
(e) Dissenters Rights. Holders of not more than ten percent (10%) of the outstanding
shares of Common Stock shall have dissented and preserved their rights to seek appraisal of their
shares.
(f) Payoff Letters. The Company shall have delivered to Parent payoff letters with
respect to the indebtedness for borrowed money of the Company and the Subsidiaries outstanding as
of the Closing set forth in Section 6.02(f) of the Company Disclosure Schedule, and
releases of all Liens securing such indebtedness, conditioned only on the payment of the amounts
described in such payoff letters.
(g) FIRPTA Affidavit. Parent shall have received a certificate from the Company to
the effect that the Company is not a U.S. real property holding company.
6.03 Conditions to Obligations of the Company. The obligations of the Company to
consummate the Merger are subject to the satisfaction, at or before the Effective Time, of each of
the following additional conditions, unless waived by the Company in writing prior to the Effective
Time:
(a) Representations and Warranties. The representations and warranties of Parent and
Merger Sub set forth in this Agreement shall be true and correct as of the Closing Date as if made
on and as of the Closing Date, other than representations and warranties that
45
expressly speak only
as of a particular date, which shall have been true and correct in all respects as of such
particular date, except where the failure of such representations and warranties to be true and
correct would not, individually or in the aggregate, have a Material Adverse Effect (without giving
effect to any materiality or Material Adverse Effect qualification contained therein).
(b) Covenants and Agreements. Each of Merger Sub and Parent shall have performed, in
all material respects, all obligations and complied with all agreements and covenants required to
be performed by them or complied with by them under this Agreement at or prior to the Effective
Time.
(c) Officers Certificate. At the Closing, each of Merger Sub and Parent shall
deliver an Officers Certificate, duly executed by their respective Chief Executive Officer and
Chief Financial Officer and dated as of the Closing Date, stating that the conditions to Closing
set forth in Sections 6.03(a) and (b) above have been satisfied.
ARTICLE 7
TERMINATION
7.01 Termination by Mutual Consent. This Agreement may be terminated and the Merger
and other Transactions may be abandoned at any time prior to the Effective Time, before or after the receipt of Stockholder
Approval, by the mutual written consent of the Company, acting under the direction of the Company
Board (or any Authorized Committee), and Parent and Merger Sub, acting under the direction of their
respective boards of directors.
7.02 Termination by Merger Sub, Parent or the Company. This Agreement may be
terminated and the Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, before or after receipt of Stockholder Approval, by either Merger Sub and Parent,
on the one hand, by action of their respective boards of directors, or the Company, on the other
hand, by action of the Company Board (or any Authorized Committee), if:
(a) any Governmental Authority shall have issued an Order (which has not been vacated,
withdrawn or overturned) permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger and such Order shall have become final and nonappealable; provided,
however, that the right to terminate this Agreement pursuant to this Section 7.02(a) shall
not be available to any party that has failed to perform in all material respects its obligations
under the proviso contained in Section 6.01(b);
(b) the Merger shall not have been consummated on or before February 18, 2010 (the
Expiration Date) (provided, however, that the Expiration Date shall be automatically
extended to April 1, 2010 in the event that on or prior to February 18, 2010, each of the following
shall have occurred: (i) it shall have been determined by Parent, the Company or the SEC pursuant
to the Exchange Act, that the Merger is subject to Rule 13e-3 under the Exchange Act; (ii) a
Schedule 13e-3 shall have been filed with the SEC in connection with the Merger; and (iii) the SEC
shall have notified Parent, Merger Sub and/or the Company that the SEC has elected to review the
Proxy Statement); provided, however, that the right to terminate this
46
Agreement under this
Section 7.02(b) shall not be available to any party whose willful breach of a
representation, warranty, covenant, or obligation under this Agreement or whose action or failure
to act has been the principal cause of or resulted in the failure of the Merger to have been
consummated on or before the Expiration Date; or
(c) the Stockholder Approval shall not have been obtained by reason of the failure to obtain
the required vote at the Stockholders Meeting or at any adjournment or postponement thereof.
7.03 Termination by Merger Sub and Parent. This Agreement may be terminated by Parent
and Merger Sub, acting under the direction of the board of directors of Parent and the board of
directors of Merger Sub, and the Merger and other Transactions may be abandoned, if:
(a) at any time prior to the Effective Time, before or after receipt of Stockholder Approval,
the Company shall have breached any of its representations, warranties, covenants or other
agreements set forth in this Agreement or any such representation or warranty shall have become
untrue after the date of this Agreement (in either case, a Company Terminating Breach)
and such Company Terminating Breach (i) would give rise to the failure of a condition set forth in
Section 6.02(a) or Section 6.02(b) and (ii) has not
been cured within thirty (30) days (provided that in no event shall such thirty (30) day
period extend beyond the Expiration Date) after written notice thereof is received by the Company;
provided that Parent and Merger Sub shall have no right to terminate this Agreement pursuant to
this Section 7.03(a) if there is an uncured Parent Terminating Breach (as defined in
Section 7.04(a)) at the time of the Company Terminating Breach;
(b) at any time prior to receipt of Stockholder Approval, (i) the Company withdraws (or
modifies in a manner adverse to Parent), or publicly proposes to withdraw, the Board Recommendation
(a Company Adverse Recommendation Change), (ii) the Company Board (or the Special
Committee) recommends, adopts, approves or declares advisable or proposes publicly to recommend,
adopt, approve or declare advisable any Acquisition Proposal, (iii) after any Acquisition Proposal
or any material modification thereto is first published, sent or given to the stockholders of the
Company, the Company Board shall have failed to publicly confirm the Board Recommendation within
ten (10) business days of a written request by Parent that it do so (which request may be made by
Parent one time following each such Acquisition Proposal or any material modification thereto), or
(iv) any third party shall have commenced a tender or exchange offer or other transaction
constituting or potentially constituting an Acquisition Proposal and the Company shall not have
sent to its security holders pursuant to Rule 14e-2 promulgated under the Securities Act, within
ten (10) business days after such tender or exchange offer is first published, sent or given, a
statement disclosing that the Company recommends rejection of such tender or exchange offer;
(c) at any time prior to the Effective Time, before or after receipt of Stockholder Approval,
a Material Adverse Effect shall have occurred and be continuing with respect to the Company that
has not been cured by the Company within thirty (30) days following receipt by the Company of
written notice of the occurrence of such event from Parent (provided that in no event shall such
thirty (30) day period extend beyond the Expiration Date);
47
(d) at any time prior to receipt of Stockholder Approval, the Company (solely for purposes of
this Section 7.03(d), acting through one or more Persons set forth in Section
7.03(d) of the Company Disclosure Schedule) intentionally breaches its obligations under
Section 5.09 in a manner that materially and adversely threatens Parents ability to
consummate the Merger; or
(e) on or after the 60th day following the date hereof, before or after receipt of Stockholder
Approval, upon the payment of the Parent Default Fee to the Company by wire transfer of same day
funds to the account designated by the Company.
7.04 Termination by the Company. This Agreement may be terminated by the Company,
acting under the direction of the Company Board (or the Special Committee), and the Merger and
other Transactions may be abandoned, if:
(a) at any time prior to the Effective Time, before or after receipt of Stockholder Approval,
Merger Sub or Parent shall have breached any of their respective representations, warranties,
covenants or other agreements set forth in this Agreement or any such representation or warranty
shall have become untrue after the date of this Agreement (in either case, a Parent
Terminating Breach) and such Parent Terminating Breach (i) would give rise to the failure of a
condition set forth in Section 6.03(a) or Section 6.03(b) and (ii) has not been
cured within thirty (30) days (provided that in no event shall such thirty (30) day period extend
beyond the Expiration Date) after written notice thereof is received by Merger Sub and Parent;
provided that the Company shall have no right to terminate this Agreement pursuant to this
Section 7.04(a) if there is an uncured Company Terminating Breach at the time of the Parent
Terminating Breach;
(b) at any time prior to receipt of Stockholder Approval, the Company exercises its right to
terminate pursuant to and in accordance with Section 5.09(b); or
(c) on or after the 60th day following the date hereof, (i) all of the conditions to the
obligations of Parent and Merger Sub to consummate the Merger set forth in Section 6.01 and
Section 6.02 have been satisfied or waived by Parent and Merger Sub in writing (other than
those conditions that by their nature are to be satisfied at the Closing, provided the Company is
then able to satisfy such conditions) and (ii) Parent and Merger Sub shall have breached their
obligation to cause the Merger to be consummated within ten (10) business days after the date the
Closing is required to take place pursuant to Section 1.02.
7.05 Effect of Termination. In the event of the termination of this Agreement and
abandonment of the Merger and the other Transactions pursuant to this Article 7, this
Agreement shall forthwith become null and void and have no effect, without any liability on the
part of any party or its officers, directors, stockholders, affiliates and agents, other than the
provisions of the last sentence of Section 5.04 and the provisions of Sections
5.06, 7.05, and Article 8; provided, however, that nothing herein shall relieve
any party from liability for willful breach of this Agreement, subject to Section 8.01(i)
and Section 8.13 with respect to any such liabilities of the Parent Group and subject to
Section 8.01(j) with respect to any such liabilities of the Company.
48
ARTICLE 8
MISCELLANEOUS
8.01 Payment of Fees and Expenses.
(a) Except as otherwise specified in this Agreement, each of the parties hereto shall bear
their own Expenses (as defined below) incurred by or on behalf of such party in preparing for,
entering into and carrying out this Agreement and the consummation and financing of the Merger and
the other Transactions. Expenses as used in this Agreement shall include all reasonable,
documented out-of-pocket expenses (including, without limitation, all fees and expenses of outside
counsel, investment bankers, banks, other financial institutions, accountants, financial printers,
experts and consultants to a party hereto) incurred by a party or on its behalf in connection with
or related to the investigation, due diligence examination, authorization, preparation,
negotiation, execution and performance of this Agreement and the Transactions and the financing
thereof and all other matters contemplated by this Agreement and the Closing, together with any
out-of-pocket costs and expenses incurred by any party in enforcing any of its rights set forth in
this Agreement, whether pursuant to litigation or otherwise.
(b) The Company shall pay H.I.G. Capital LLC (as agent for Parent and Merger Sub) the Break-Up
Fee (as defined in Section 8.01(c)) if:
(i) this Agreement is terminated pursuant to (A) Section 7.02(b) and prior to such
termination a bona fide Acquisition Proposal has been announced, disclosed or otherwise
communicated to any member of the Company Board or any officer of the Company, (B) Section
7.02(c) and prior to the Stockholder Meeting, an Acquisition Proposal has been publicly
announced or shall have otherwise become publicly known and in each case has not been withdrawn, or
(C) Section 7.03(a) and prior to the breach giving rise to such right of termination, a
bona fide Acquisition Proposal has been announced, disclosed or otherwise communicated to any
member of the Company Board or any officer of the Company, and
(ii) within nine (9) months of such termination, the Company enters into a definitive
agreement to consummate, or consummates, a transaction constituting an Acquisition Proposal. For
purposes of this Section 8.01, all references (whether in words or numerals) to fifteen
percent (15%) in the definition of Acquisition Proposal shall be deemed to refer to fifty percent
(50%).
Payment of the Break-Up Fee pursuant to this Section 8.01(b) shall be made by wire transfer
of immediately available funds upon the earlier of the execution of a definitive agreement with
respect to, or consummation of any transaction contemplated by, an Acquisition Proposal.
(c) If this Agreement is terminated by Parent and Merger Sub pursuant to Section
7.03(b) or 7.03(d) or by the Company pursuant to Section 7.04(b), then, on the
date of any such termination of this Agreement by the Company under Section 7.04(b) or
within two (2) business days following termination of this Agreement by Parent and Merger Sub under
Section 7.03(b) or 7.03(d), the Company shall pay H.I.G. Capital LLC (as agent for
Parent and Merger Sub) the
49
Break-Up Fee by wire transfer of immediately available funds. Break-Up Fee means an
amount equal to Seven Million Five Hundred Thousand Dollars ($7,500,000).
(d) In the event that this Agreement is terminated (i) by Parent or the Company pursuant to
Section 7.02(c), the Company shall pay to Parent an amount equal to Parents and Merger
Subs Expenses, up to a maximum amount of Three Million Two Hundred Fifty Thousand Dollars
($3,250,000) (it being agreed and understood that if the Break-Up Fee becomes payable pursuant to
Section 8.01(b), any Expenses paid pursuant to this Section 8.01(d)(i) shall be
credited towards the payment of the Break-Up Fee), or (ii) by Parent pursuant to Section
7.03(a) in the case of a willful breach by the Company, the Company shall pay to Parent an
amount equal to Parents and Merger Subs Expenses up to a maximum amount of Four Million Five
Hundred Thousand Dollars ($4,500,000) (it being agreed and understood that if the Break-Up Fee
becomes payable pursuant to Section 8.01(b), any expenses paid pursuant to this Section
8.01(d)(ii) shall not be credited towards the payment of the Break-Up Fee), in each case by
wire transfer of immediately available funds to an account or accounts designated in writing by
Parent, within two (2) business days following the receipt of invoices or other documentation of
Parent and Merger Subs Expenses.
(e) If this Agreement is terminated by the Company pursuant to Section 7.04(c), (i)
because Parent and Merger Sub fail to cause the Merger to be consummated because of a failure to
receive the proceeds of one or more of the Debt Financings (other than as a result of Parents
failure to satisfy the conditions set forth in the Debt Commitment Letters due to a failure by
Investor to fund its equity commitment pursuant to the Equity Commitment Letter) that, together
with the amount of equity financing committed pursuant to the Equity Commitment Letter, are
sufficient to fund the Transactions or because of their refusal to accept alternative debt
financing, and (ii) Parent and Merger Sub are not otherwise in material and willful breach of this
Agreement (including their respective obligations pursuant to Section 5.18) (a
Non-Breach Financing Failure) then Parent shall pay to the Company the Parent Break-Up
Fee by wire transfer of immediately available funds within two (2) business days following such
termination of this Agreement. Parent Break-Up Fee means an amount equal to Seven
Million Five Hundred Thousand Dollars ($7,500,000).
(f) If this Agreement is terminated by (i) Parent and Merger Sub pursuant to Section
7.03(e) or (ii) the Company pursuant to Section 7.04(c) in circumstances not involving
a Non-Breach Financing Failure, then Parent shall pay to the Company an amount equal to Ten Million
Dollars ($10,000,000) (the Parent Default Fee) by wire transfer of immediately available
funds within two (2) business days following termination of this Agreement.
(g) The Company hereby acknowledges that the agreements contained in this Section 8.01
are an integral part of the Transactions and that, without these agreements, Parent would not have
entered into this Agreement. Accordingly, if the Company fails to pay to Parent the full amount
provided for in Sections 8.01(b), 8.01(c) or 8.01(d) promptly following
such payment becoming due, the Company shall (i) pay to Parent interest on such unpaid amount at
the prime rate established by the Wall Street Journal Table of Money Rates on the date such payment
was required to be made, during the period from and including the date payment of such amount was
due up to but excluding the actual date of payment and (ii) reimburse Parent for any out-of-pocket
expenses (including the reasonable fees of counsel) incurred by Parent in
50
connection with Parents enforcement of its rights to such amounts under this Section
8.01. Notwithstanding anything in this Agreement to the contrary, in the event the Break-Up
Fee becomes payable, then the Break-Up Fee shall be Parent and Merger Subs sole and exclusive
remedy under this Agreement (except in the case of the events described in Section
8.01(d)). If Parent or Merger Sub terminates this Agreement pursuant to Section
7.03(a) in the case of a willful breach by the Company, then Parent or Merger Subs sole and
exclusive remedy under this Agreement shall be to receive any Expenses of Parent and Merger Sub
payable pursuant to Section 8.01(d) and any subsequent Break-Up Fee payable pursuant to
Section 8.01(b). The damages resulting from termination of this Agreement under
circumstances where a Break-Up Fee is payable are uncertain and incapable of accurate calculation
and therefore, the amounts payable pursuant to Section 8.01 are not a penalty but rather
constitute liquidated damages in a reasonable amount that will compensate Parent for the efforts
and resources expended and opportunities foregone while negotiating this Agreement and in reliance
on this Agreement and on the expectation of the consummation of the Transactions.
(h) Parent hereby acknowledges that the agreements contained in this Section 8.01 are
an integral part of the Transactions and that, without these agreements, the Company would not have
entered into this Agreement. Accordingly, if Parent fails to pay to the Company the full amount
provided for in Sections 8.01(e) or 8.01(f) promptly following such payment
becoming due, Parent shall (i) pay to the Company interest on such unpaid amount at the prime rate
established by the Wall Street Journal Table of Money Rates on the date such payment was required
to be made, during the period from and including the date payment of such amount was due up to but
excluding the actual date of payment and (ii) reimburse the Company for any out-of-pocket expenses
(including the reasonable fees of counsel) incurred by the Company in connection with the Companys
enforcement of its rights to such amounts under this Section 8.01. Notwithstanding
anything in this Agreement to the contrary, in the event that the Parent Break-Up Fee or Parent
Default Fee is payable, then the Parent Break-Up Fee or Parent Default Fee, as applicable, shall be
the Companys sole and exclusive remedy under this Agreement. If the Company terminates this
Agreement pursuant to Section 7.04(a) in the case of a willful breach by Parent or Merger
Sub, then the Company may seek Company Damages (as defined in Section 8.01(i)) against
Parent or Merger Sub; provided, that the maximum aggregate liability (inclusive of the Parent
Break-Up Fee or Parent Default Fee) of Parent and Merger Sub, collectively, shall not exceed the
Parent Liability Cap. The damages resulting from termination of this Agreement under circumstances
where a Parent Break-Up Fee or Parent Default Fee is payable are uncertain and incapable of
accurate calculation and therefore, the amounts payable pursuant to Section 8.01 are not a
penalty but rather constitute liquidated damages in a reasonable amount that will compensate the
Company for the efforts and resources expended and opportunities foregone while negotiating this
Agreement and in reliance on this Agreement and on the expectation of the consummation of the
Transactions.
(i) Notwithstanding anything herein to the contrary, the maximum aggregate liability of the
Parent Group (including any amounts payable pursuant to Sections 8.01(e) or
8.01(f)) for any direct or indirect loss or damage suffered in connection with, or arising
out under, this Agreement, including, but not limited to, the negotiation, entry into, performance,
or the terms of this Agreement, any agreement or document contemplated hereby, the failure of the
Merger to be consummated or for a breach or claimed breach or failure or claimed failure to perform
hereunder and including (notwithstanding Section 8.15) the benefit of the bargain lost
51
by the Companys stockholders (taking into consideration relevant matters, including any lost
premium, other combination opportunities and the time value of money) (such damages, collectively,
Company Damages) or otherwise shall be limited to Ten Million Dollars ($10,000,000) plus
any amounts that may be payable under the second sentence of Section 8.01(h) (the
Parent Liability Cap). In no event shall the Company or its affiliates seek or permit to
be sought on behalf of the Company any damages or any other recovery, judgment or damages of any
kind, including consequential, indirect, or punitive damages, from any member of the Parent Group
other than, with respect to the Limited Guarantee, the Guarantor, in connection with this Agreement
or the Transactions. The Company acknowledges and agrees that it has no right of recovery against,
and no personal liability shall attach to, in each case with respect to Company Damages, any member
of the Parent Group (other than Parent and Merger Sub to the extent provided in this Agreement and
other than the Guarantor to the extent provided in the Limited Guarantee), through Parent or
otherwise, whether by or through attempted piercing of the corporate, limited partnership or
limited liability company veil, by or through a claim by or on behalf of Parent against the
Guarantor or any other member of the Parent Group, by the enforcement of any assessment or by any
legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or
otherwise, except for its rights to recover from the Guarantor (but not any other member of the
Parent Group (including any general partner or managing member)) under and to the extent provided
in the Limited Guarantee and subject to the Parent Liability Cap and the other limitations
described therein. Recourse against the Guarantor under the Limited Guarantee or against Parent
and Merger Sub to the extent provided in this Agreement shall be the sole and exclusive remedy of
the Company and its affiliates against the Guarantor and any other member of the Parent Group in
respect of any liabilities or obligations arising under, or in connection with, this Agreement or
the Transactions. The Company acknowledges that both Parent and Merger Sub are newly-formed
companies and do not have any material assets except in connection with this Agreement as expressly
set forth herein. The terms of this Section 8.01(i) shall not be deemed to be superseded,
amended or modified in any respect by the terms of any other provisions of this Agreement. The
provisions of this Section 8.01(i) are intended to be for the benefit of, and shall be
enforceable by, each member of the Parent Group.
(j) Notwithstanding anything herein to the contrary and subject to Section 8.13, the
maximum aggregate liability of the Company and its affiliates (including any amounts payable
pursuant to Sections 8.01(b), 8.01(c), or 8.01(d)) for any direct or
indirect loss or damage suffered in connection with, or arising out under, this Agreement,
including, but not limited to, the negotiation, entry into, performance, or the terms of this
Agreement, any agreement or document contemplated hereby, the failure of the Merger to be
consummated or for a breach or claimed breach or failure or claimed failure to perform hereunder
(such damages, collectively, Parent Damages) or otherwise shall be limited to the
Break-Up Fee and any Expenses of Parent and Merger Sub payable pursuant to Section 8.01(d)
plus any amounts that may be payable under the second sentence of Section 8.01(g) (the
Company Liability Cap). In no event shall any member of the Parent Group seek or permit
to be sought on behalf of any member of the Parent Group any damages or any other recovery,
judgment or damages of any kind, including consequential, indirect, or punitive damages, from the
Company or any of its affiliates in connection with this Agreement or the Transactions in excess of
the Company Liability Cap; provided that nothing shall limit the rights of Parent and Merger Sub
under Section 8.13. Parent and Merger Sub each acknowledges and agrees that it has no
right of
52
recovery against, and no personal liability shall attach to, in each case with respect to
Parent Damages, any affiliate of the Company, whether by or through attempted piercing of the
corporate veil, by virtue of any statute, regulation or applicable Law, or otherwise. The terms of
this Section 8.01(j) shall not be deemed to be superseded, amended or modified in any
respect by the terms of any other provisions of this Agreement other than Section 8.13.
The provisions of this Section 8.01(j) are intended to be for the benefit of, and shall be
enforceable by, each affiliate of the Company.
(k) The parties hereto acknowledge and agree that in no event shall the Company be required to
pay the Break-Up Fee on more than one occasion nor shall Parent and Merger Sub be required to pay
the Parent Break-Up Fee or the Parent Default Fee on more than one occasion and in no event pay
both the Parent Break-Up Fee and Parent Default Fee, whether the Break-Up Fee, the Parent
Break-Up Fee or the Parent Default Fee may be payable under more than one provision of this
Agreement at the same time or at different times and upon the occurrence of different events.
8.02 Guarantee. Parent hereby irrevocably and unconditionally guarantees the due and
punctual performance of Merger Subs obligations hereunder and, following the Effective Time, the
Surviving Corporations obligations under Sections 5.07 and 5.15. Parent will
cause Merger Sub to perform its obligations under this Agreement.
8.03 No Survival. Subject to Section 7.05, the representations, warranties
and agreements made in this Agreement shall not survive beyond the Effective Time or the
termination of this Agreement in accordance with Article 7 hereof. Notwithstanding the
foregoing, the agreements set forth in Articles 1 and 2, Sections 5.07 and
5.15 and Article 8 shall survive the Effective Time.
8.04 Non-Reliance. Parent and Merger Sub acknowledge that the Company has not made
and is not making any representations or warranties whatsoever regarding the subject matter of this
Agreement, express or implied, except for those representations and warranties set forth in
Article 3, and that they are not relying and have not relied on any representations or
warranties whatsoever regarding the subject matter of this Agreement, express or implied, except as
provided in Article 3.
8.05 Modification or Amendment. This Agreement may be amended by the parties hereto
at any time before or after approval of this Agreement by the stockholders of the Company;
provided, however, that after any such approval, there shall not be made any amendment that by Law
requires the further approval by such stockholders without such further approval. Without limiting
the foregoing, this Agreement may not be amended or modified except by an instrument in writing
signed by the parties.
8.06 Entire Agreement; Assignment. This Agreement (including the documents and the
instruments referred to herein) and the Confidentiality Agreement constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof. Neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the parties hereto (whether
by operation of Law or otherwise) without the prior written consent of the other party
53
(except that each of Parent and Merger Sub may assign its rights, interests and obligations
(a) to any of their respective affiliates or direct or indirect subsidiaries (b) from and after the
Effective Time, in connection with a merger or consolidation involving Parent or other disposition
of all or substantially all of the assets of Parent or the Surviving Corporation, or (c) from and
after the Effective Time, to any lender providing financing to Parent or the Surviving Corporation
or any of their Affiliates, for collateral security purposes, and any such lender may exercise all
of the rights and remedies of Parent hereunder; in each case without the consent of the Company, so
long as they remain primarily obligated with respect to any such delegated obligation). Subject to
the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8.07 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or public policy, unless the effects of
such invalidity, illegality or unenforceability would prevent the parties from realizing the major
portion of the economic benefits of the Merger that they currently anticipate obtaining therefrom,
all other conditions and provisions of this Agreement shall nevertheless remain in full force and
effect. Upon such determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the fullest extent permitted
by applicable Law in an acceptable manner to the end that the Transactions are fulfilled to the
extent possible.
8.08 Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when delivered in person,
by overnight courier or telecopier to the respective parties as follows:
If to Parent or Merger Sub:
c/o H.I.G. Capital LLC
1001 Brickell Bay Drive
27th Floor
Miami, FL 33131
Attention: Brian Schwartz
Facsimile No.: (305) 379-2013
1001 Brickell Bay Drive
27th Floor
Miami, FL 33131
Attention: Brian Schwartz
Facsimile No.: (305) 379-2013
with a copy to:
Kirkland & Ellis LLP
300 North LaSalle
Chicago, IL 60654
Attention: Michael H. Weed
Facsimile No.: (312) 862-2200
300 North LaSalle
Chicago, IL 60654
Attention: Michael H. Weed
Facsimile No.: (312) 862-2200
If
to the Company:
Allion Healthcare, Inc.
Allion Healthcare, Inc.
54
1660 Walt Whitman Road
Suite 105
Melville, NY 11747
Suite 105
Melville, NY 11747
Attention: Michael P. Moran
Facsimile No.: (631) 249-5863
Facsimile No.: (631) 249-5863
with a copy to:
Alston & Bird LLP
One Atlantic Center
1201 Peachtree Street
Atlanta, GA 30309
Attention: Steven L. Pottle
Facsimile No.: (404) 881-7777
One Atlantic Center
1201 Peachtree Street
Atlanta, GA 30309
Attention: Steven L. Pottle
Facsimile No.: (404) 881-7777
or to such other address as the person to whom notice is given may have previously furnished to the
other in writing in the manner set forth above; provided that notice of any change of address shall
be effective only upon receipt thereof.
8.09 Governing Law. This Agreement shall be governed by and construed in accordance
with the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under
applicable principles of conflicts of Laws thereof.
8.10 Descriptive Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
8.11 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute one and the same
agreement, and any one of which may be delivered by facsimile.
8.12 Certain Definitions. As used in this Agreement:
(a) the term affiliate, as applied to any person, shall mean any other person
directly or indirectly controlling, controlled by, or under common control with, that person. For
the purposes of this definition, control (including, with correlative meanings, the terms
controlling, controlled by and under common control with), as applied to any person, means
the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of that person, whether through the ownership of voting securities, by
contract or otherwise;
(b) the term Authorized Committee means the Special Committee or any other committee
of the Company Board given power by the Company Board for any purpose hereunder;
55
(c) the term Disinterested Director means any director of the Company who does not
have any relationship, interest, understanding or arrangement (in each case, direct or indirect)
that would cause such director to have a material interest in the Merger in addition to or
different from that of the Companys public stockholders;
(d) the term Gross Up Payment means the amount necessary to cover the excise tax, if
any, imposed by Section 4999 of the Code on the Phantom Stock Unit Consideration paid to a holder
of a Phantom Stock Unit, plus any income and excise taxes associated with the Gross-Up Payment;
(e) the term Guarantor means H.I.G. Bayside Debt & LBO Fund II, L.P.;
(f) the term Intervening Event means any material event, development, state of
affairs or change in circumstances, in each case that arises after the date of this Agreement;
provided, however, that in no event shall the receipt, existence or terms of an Acquisition
Proposal or any matter relating thereto or consequence thereof constitute an Intervening Event;
(g) the term Knowledge when used in this Agreement with respect to the Company means
the actual knowledge of Michael P. Moran, Russell J. Fichera, Stephen A. Maggio and Robert E.
Fleckenstein after reasonable investigation;
(h) the term Knowledge when used in this Agreement with respect to Parent means the
actual knowledge of any of the officers of Parent or Merger Sub after reasonable investigation;
(i) the term Law or Laws means any foreign or domestic (federal, state or
local) law, statute, ordinance, regulation, rule, code, permit, license, injunction, judgment,
decree or order, including, but not limited to, any laws relating to healthcare regulatory matters,
including: (i) 42 U.S.C. §§ 1320a-7, 7a and 7b, which are commonly referred to as the Federal
Fraud Statutes; (ii) 42 U.S.C. § 1395nn, which is commonly referred to as the Stark Statute;
(iii) 31 U.S.C. §§ 3729-3733, which is commonly referred to as the Federal False Claims Act; (iv)
42 U.S.C. §§ 1320d through 1320d-8 and 42 C.F.R. §§ 160, 162 and 164, which are commonly referred
to as the Health Insurance Portability and Accountability Act of 1996; and (v) any related
federal or state statutes or regulations governing claims or payments;
(j) the term Limited Guarantee means the limited guarantee of the Guarantor dated as
of the date hereof, in favor of the Company with respect to certain obligations of the Parent under
this Agreement;
(k) the term Material Adverse Effect, as used in this Agreement with respect to the
Company, means any event, change, circumstance, effect or state of facts that is, or could
reasonably be expected to be, materially adverse to (i) the business, financial condition or
results of operations of the Company and the Subsidiaries, taken as a whole or (ii) the ability of
the Company to perform, in all material respects, its obligations under this Agreement or to
consummate the Transactions; provided, however, that Material Adverse Effect shall not include
the effect of any event, change, circumstance, effect or state of facts arising out of or
attributable to any of the following, either alone or in combination: (A) general economic or
political conditions (including those affecting the securities markets), (B) the industries in
which
56
the Company and the Subsidiaries operate generally, (C) any changes in applicable Laws,
regulations or GAAP (D) acts of war (whether or not declared), sabotage or terrorism, military
actions or the escalation thereof or other force majeure events (such as natural disasters, acts of
God or other events not within the reasonable control of the Company) occurring after the date
hereof, (E) changes in the trading price of the shares of Common Stock between the date of this
Agreement and the Effective Time (it being understood that any fact or development regarding the
Company giving rise to or contributing to such change in the trading price of the shares of Common
Stock may be the cause of a Material Adverse Effect), (F) the direct effects of compliance with
this Agreement on the operating performance of the Company, (G) the announcement of this Agreement
or any of the Transactions, the fulfillment of the parties obligations hereunder or the
consummation of the Transactions, (H) failure by the Company to meet internal or third-party
projections, forecasts, budgets or published revenue or earnings projections for any period (it
being understood that any fact or development giving rise to or contributing to such failure may be
the cause of a Material Adverse Effect), or (I) any claim, action or proceeding by the Companys
stockholders arising out of or related to this Agreement or any of the Transactions, or (J) changes
or proposed changes in reimbursement rates, coverage limitations, the method of calculation of
reimbursement rates or industry pricing benchmarks applicable to the Companys or any Subsidiarys
products or services, except, in each of clauses (A), (B), (C) and (D), to the extent, and only to
the extent, such circumstance, change, development, event or state of facts has a
disproportionately adverse effect on the Company and the Subsidiaries taken as a whole, as compared
to other Persons engaged in a similar business;
(l) the term Material Adverse Effect, as used in this Agreement with respect to
Parent and Merger Sub, means any event, circumstance, change, effect or state of facts that,
individually or in the aggregate with all other events, circumstances, changes and effects, is
materially adverse to the ability of Parent or Merger Sub to consummate the Transactions;
(m) the term Order means executive order or decree, judgment, injunction, ruling or
other order, whether temporary, preliminary or permanent;
(n) the term Parent Group means, collectively, Parent, Merger Sub, the Guarantor or
any of Parents, Merger Subs or the Guarantors respective former, current or future directors,
officers, employees, agents, general or limited partners, managers, members, stockholders,
affiliates or assignees or any former, current or future director, officer, employee, agent,
general or limited partner, manager, member, stockholder, affiliate or assignee of any of the
foregoing;
(o) the term Person or person shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a group as such term is
defined in Section 13(d)(3) of the Exchange Act);
(p) the term Restricted Stock Award means each share of Common Stock outstanding
immediately prior to the Effective Time that is subject to a repurchase option, risk of forfeiture
or other restriction or condition granted to any current or former employee, director, consultant
or advisor of the Company or any Subsidiary or any other person under the Stock Plans or any other
agreement with the Company.
57
(q) the term Special Committee means a committee of the Company Board, each of the
members of which (i) is a Disinterested Director within the meaning of the DGCL and (ii) is not
otherwise affiliated with Parent or Merger Subsidiary and not a member of the Companys management,
formed for the purpose of evaluating, and making a recommendation to the full Company Board with
respect to this Agreement and the Transactions, including the Merger, and shall include any
successor committee to the existing Special Committee or any reconstitution thereof; and
(r) the term subsidiary or subsidiaries means, with respect to any Person,
any corporation, partnership, joint venture or other legal entity of which such Person (either
alone or through or together with any other subsidiary), owns, directly or indirectly, more than
50% of the stock or other equity or beneficial interests, the holders of which are generally
entitled to vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
8.13 Specific Performance. The parties hereto agree that irreparable damage would
occur to Parent and Merger Sub in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It is accordingly
agreed that Parent and Merger Sub shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court
of the United States or any state having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity. For the avoidance of doubt, the Company shall not
be entitled to seek an injunction or injunctions to prevent breaches of this Agreement or to
enforce specifically the terms and provisions hereof. The terms of this Section 8.13 shall
not be deemed to be superseded, amended or modified in any respect by the terms of any other
provisions of this Agreement.
8.14 Extension; Waiver. At any time prior to the Effective Time, a party may (a)
extend the time for the performance of any of the obligations or other acts of the other party, (b)
waive any inaccuracies in the representations and warranties of the other party contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject to the proviso in
Section 8.05, waive compliance by the other party with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
8.15 Third-Party Beneficiaries. This Agreement is not intended to and does not confer
upon any person other than the parties hereto any legal or equitable rights or remedies, except for
the provisions of Section 5.07 and, only after the Effective Time, the provisions of
Article 2.
8.16 Certain Interpretations. In this Agreement, unless otherwise specified, the
following rules of interpretation apply:
(a) Unless otherwise indicated, the words include, includes and including, when used
herein, shall be deemed in each case to be followed by the words without limitation.
58
(b) References to $ and dollars are to the currency of the United States.
(c) Words importing the singular include the plural and vice versa.
(d) Words importing one gender include the other gender.
(e) References to months are to calendar months.
(f) A defined term has its defined meaning throughout this Agreement and in each Exhibit and
Schedule to this Agreement, regardless of whether it appears before or after the place where it is
defined.
(g) References to made available shall mean that such documents or information referenced
shall have been contained, prior to the date hereof, in the Companys SEC Reports or the Companys
electronic data room for Project Alpha Bravo maintained by Merrill Corporation to which Parent and
its counsel had access.
8.17 Submission to Jurisdiction. Each of the parties hereto irrevocably and
unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Delaware
Court of Chancery or, in the event (but only in the event) such court does not have subject matter
jurisdiction, any other court of the state of Delaware or the United States District Court for the
District of Delaware, in any action or proceeding arising out of or relating to this Agreement.
Each of the parties hereto agrees that, subject to rights with respect to post-trial motions and
rights of appeal or other avenues of review, a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by Law. Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating
to this Agreement in the Delaware Court of Chancery or any other state court of the State of
Delaware or the United States District Court for the District of Delaware. Each of the parties
hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively
do so, the defense of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
* * * * *
59
IN WITNESS WHEREOF, each of the parties has caused this Agreement and Plan of Merger to be
executed on its behalf by its respective officer thereunto duly authorized, all as of the day and
year first above written.
ALLION HEALTHCARE, INC. |
||||
By: | /s/ Michael P. Moran | |||
Name: | Michael P. Moran | |||
Title: | Chairman, President and Chief Executive Officer | |||
BRICKELL BAY MERGER CORP. |
||||
By: | /s/ Brian D. Schwartz | |||
Name: | Brian D. Schwartz | |||
Title: | President | |||
BRICKELL BAY ACQUISITION CORP. |
||||
By: | /s/ Brian D. Schwartz | |||
Name: | Brian D. Schwartz | |||
Title: | President | |||
Pursuant to Item 601(b)(2) of Regulation S-K, the following schedules to the Merger Agreement have
been omitted. The Registrant agrees to furnish supplementally a copy of all omitted schedules to
the Securities and Exchange Commission upon request.
SCHEDULES
2.07(a) Promissory Notes
3.01(b) Organization and Qualification
3.03 Capitalization
3.05 No Violation; Required Filings and Consents
3.06 Compliance with Laws
3.07 SEC Filings; Undisclosed Liabilities
3.08 Absence of Certain Changes or Events
3.09 Litigation
3.11 Benefit Plans
3.12 Real Property; Title to Assets
3.13 Intellectual Property
3.14 Taxes
3.16 Material Contracts
3.17 Insurance
3.18 Affiliated Transactions
3.23 Payors and Vendors
5.01 Interim Operations
5.07(c) Directors and Officers Insurance
6.01(c) Consents
6.02(f) Payoff Letters
7.03(d) Designated Persons
3.01(b) Organization and Qualification
3.03 Capitalization
3.05 No Violation; Required Filings and Consents
3.06 Compliance with Laws
3.07 SEC Filings; Undisclosed Liabilities
3.08 Absence of Certain Changes or Events
3.09 Litigation
3.11 Benefit Plans
3.12 Real Property; Title to Assets
3.13 Intellectual Property
3.14 Taxes
3.16 Material Contracts
3.17 Insurance
3.18 Affiliated Transactions
3.23 Payors and Vendors
5.01 Interim Operations
5.07(c) Directors and Officers Insurance
6.01(c) Consents
6.02(f) Payoff Letters
7.03(d) Designated Persons